Photodynamic therapy (PDT) is a promising non-invasive strategy in the fight against that which circumvents the systemic toxic effects of chemotherapeutics. It relies on photosensitizers (PSs), which are photoactivated by light irradiation and interaction with molecular oxygen. This generates highly reactive oxygen species (such as 1O2, H2O2, O2, ·OH), which kill cancer cells by necrosis or apoptosis. Despite the promising effects of PDT in cancer treatment, it still suffers from several shortcomings, such as poor biodistribution of hydrophobic PSs, low cellular uptake, and low efficacy in treating bulky or deep tumors. Hence, various nanoplatforms have been developed to increase PDT treatment effectiveness and minimize off-target adverse effects. Liposomes showed great potential in accommodating different PSs, chemotherapeutic drugs, and other therapeutically active molecules. Here, we review the state-of-the-art in encapsulating PSs alone or combined with other chemotherapeutic drugs into liposomes for effective tumor PDT.