<p>Ethosomes have emerged as a revolutionary class of ethanol-based lipid vesicles designed to enhance transdermal and targeted drug delivery. By integrating high ethanol concentrations (20–45%) into their structure, ethosomes achieve superior skin permeability, deformability, and drug-loading capacity compared to conventional liposomes. This review provides a comprehensive evaluation of ethosomal drug delivery systems, detailing their physicochemical characteristics, preparation techniques, and underlying mechanisms of skin penetration, supported by advanced characterization tools such as ATR-FTIR, DSC, CLSM, and TEM. The review further explores the wide therapeutic scope of ethosomal systems across dermatology, infectious diseases, oncology, inflammation, autoimmune disorders, and cosmeceutical applications. Commercially available ethosomal products—such as <i>Decorin Cream</i>, <i>Supravir</i>, and <i>Noicellex</i>—underscore the clinical relevance and translational potential of this nanocarrier platform. Despite their advantages, ethosomes face formulation challenges including colloidal instability, drug leakage, and limited scalability. Future directions in ethosomal research emphasize formulation stabilization using polymers and antioxidants, the development of stimuli-responsive systems, and enhanced in vitro–in vivo correlation models. With growing interdisciplinary interest, ethosomes are poised to redefine the landscape of non-invasive drug delivery, offering new possibilities for therapeutic intervention in both biomedical and cosmetic domains.</p> Graphical Abstract <p></p>