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Virtually all cells in the organism secrete extracellular vesicles (EVs), a heterogeneous population of lipid bilayer membrane-enclosed vesicles that transport and deliver payloads of proteins and nucleic acids to recipient cells, thus playing central roles in cell-cell communications. Exosomes, nanosized EVs of endosomal origin, regulate many pathophysiological processes including immune responses and inflammation, tumour growth, and infection. Healthy subjects and patients with different diseases release exosomes with different RNA and protein contents into the circulation, which can be measured as biomarkers. The discovery of exosomes as natural carriers of functional small RNA and proteins has raised great interest in the drug delivery field, as it may be possible to harness these vesicles for therapeutic delivery of miRNA, siRNA, mRNA, lncRNA, peptides, and synthetic drugs. However, systemically delivered exosomes accumulate in liver, kidney, and spleen. Targeted exosomes can be obtained by displaying targeting molecules, such as peptides or antibody fragments recognizing target antigens, on the outer surface of exosomes. Display of glycosylphosphatidylinositol (GPI)-anchored nanobodies on EVs is a novel technique that enables EV display of a variety of proteins including antibodies, reporter proteins, and signaling molecules. However, naturally secreted exosomes show limited pharmaceutical acceptability. Engineered exosome mimetics that incorporate desirable components of natural exosomes into synthetic liposomes or nanoparticles, and are assembled using controllable procedures may be more acceptable pharmaceutically. In this communication, we review the current understanding of physiological and pathophysiological roles of exosomes, their potential applications as diagnostic markers, and current efforts to develop improved exosome-based drug delivery systems.