Administration of active pharmaceutical ingredients (APIs) through the skin, by means of topical drug delivery systems, is an advanced therapeutic approach. As the skin is the largest organ of the human body, primarily acting as a natural protective barrier against permeation of xenobiotics, specific strategies to overcome this barrier are needed. Liposomes are nanometric-sized delivery systems composed of phospholipids, which are key components of cell membranes, making liposomes well tolerated and devoid of toxicity. As their lipid compositions are similar to those of the skin, liposomes are used as topical, dermal, and transdermal delivery systems. However, permeation of the first generation of liposomes through the skin posed some limitations; thus, a second generation of liposomes has emerged, overcoming permeability problems. Various mechanisms of permeation/penetration of elastic/ultra-deformable liposomes into the skin have been proposed; however, debate continues on their extent/mechanisms of permeation/penetration. In vivo bioavailability of an API administered in the form of ultra-deformable liposomes is similar to the bioavailability achieved when the same API is administered in the form of a solution by subcutaneous or epi-cutaneous injection, which demonstrates their applicability in transdermal drug delivery.