Background <p>Hydrophilic drugs are highly soluble therapeutic compounds; however, rapid clearance, low intracellular absorption, limited biodistribution, and potential toxicity restrict their therapeutic efficacy. Encapsulating the drugs into delivery systems can be a guiding strategy for overcoming these problems. Drug delivery systems, such as emulsions, polymeric nanoparticles, liposomes, and noisomes, enhance the entrapment efficiency, pharmacokinetics, and bioavailability of hydrophilic drugs, but often exhibit burst release and drug leakage. To address these challenges, lipid-based nanoparticles, nanostructured lipid carriers, and liposomes have been developed. Although lipid-based carriers have been widely used as hydrophobic drugs, loading hydrophilic drugs remains difficult.</p> Area covered <p>This review highlights the formulation strategies for encapsulating hydrophilic drugs in lipid nanocarriers. It focuses on modifying conventional formulation methods and hydrophilic drug core modifications to achieve efficient encapsulation.</p> Expert opinion <p>Optimizing the loading efficiency of water-soluble drugs remains challenging because of drug leakage into the aqueous phase during nanoparticle formation. Recent approaches including encapsulation and drug modification have improved the efficiency for hydrophilic drugs. Proper fabrication methods enhance hydrophilic drug loading and improve pharmacokinetic profiles. Additionally, modifying hydrophilic drugs can reduce water solubility and increase partition coefficients, thereby promoting improved drug encapsulation into lipid carriers.</p>