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Transdermal delivery systems have gained popularity as a non-invasive method of drug administration that offers several advantages over other routes of drug delivery. They are noninvasive and self-administered delivery system which improves patient compliance and provide a controlled release of the drug. The greatest challenge of transdermal delivery systems is that in which the outermost layer of skin acts as a barrier function for transfer of therapeutic agent into the body. Molecules with high molecular weights do not pass through the skin. Therefore, only a limited number of drugs are administered by this route. So encapsulating the drugs in transfersomes is one of the best approaches to overcome this problem. Transferosomes are lipid based vesicular drug delivery systems which have a unique composition that allows them to overcome the limitation of conventional drug delivery system. They are composed of phospholipids and surfactants, which provide them with the ability to encapsulate both hydrophilic and hydrophobic drugs. They penetrate through stratum corneum by either intracellular route or the transcellular route by the generation of natural osmotic gradient. Compared to conventional drug delivery systems, transferosomes offer several advantages like avoidance of first pass metabolism, increasing bioavailability of drugs. Due to its high deformability it enhances the penetration of intact vesicles. Transferosomes vary from other conventional vesicles due to their softer, better adjustable and ultra deformable artificial membranes. This review summarizes the concept of transfersomes, including their structure, formation mechanism of action, different methods of preparation, advantages, limitations along with applications. [ABSTRACT FROM AUTHOR]