A review of literature was carried out to determine methods of production of liposomes, their stability, biodistribution and their uses as drug delivery systems. The conventional method of preparing liposomes is basically for the multilamellar vesicles (MLVs). However, other methods are used to reduce the size of these MLVs to small unilamellar vesicles (SUVs) so as to increase their plasma lifetime and consequently increase the possibility of achieving greater tissue localisation. Some of these methods of size reduction are sonication and high pressure extrusion. Each of these methods has its own advantages and disadvantages. Large unilamellar vesicles (LUVs), on the other hand, are prepared mainly by detergent removal method and reverse phase extrusion technique. There are also improved pharmacokinetic properties with liposomal drugs compared to free drugs, though some formulation factors affect the release kinetics of the liposomal drugs. The review also shows that liposomes have a lot of biomedical applications and uses. They have been used in drug targeting, oral delivery of vaccines, insulins, peptides and some compounds, which are usually degraded in the gastrointestinal tract. It has also found application in topical therapy especially in the eye and lungs. Other areas of application are in cancer chemotherapy and treatment of human immunovirus (HIV) infection. The control of the stability of liposomes is an essential prerequisite for effective use as drug carriers. Leakage of the liposome is attributable mainly to differences in lamellar structure. For instance, MLVs are less prone to leakage than ULVs. The use of a combination of saturated phospholipid and cholesterol in the formulation of the liposomes has also been found to enhance stability with lower tendency to leakage.