Liposomal delivery systems have significantly enhanced the efficacy and safety of chemotherapeutic agents compared to free (non-liposomal) formulations. Liposomes are vesicles made up of lipophilic bilayer and a hydrophilic core which provides perfect opportunity for their application as transport vehicle for various therapeutic and diagnostic agents. Doxorubicin is the most exploited chemotherapeutic agent for evaluation of different liposomal applications, as its physicochemical properties permit high drug entrapment and easy remote loading in pre-formulated liposomes. Pegylated liposomal doxorubicin clinically approved and, on the market, Doxil®, exemplifies the benefits offered upon the surface modification of liposome with polyethylene glycol. This unique formulation prolonged the drug residence time in the circulation and increased accumulation of doxorubicin in tumor tissue via passive targeting (enhanced permeability and retention effect). However, there is ample scope for further improvement in the efficiency of targeting tumors by coupling biological active ligands onto the liposome surface to generate intelligent drug delivery systems. Small biomolecules such as peptides, fraction of antibodies and carbohydrates have the potential to target receptors present on the surface of the malignant cells. Hence, active targeting of malignant cells using functionalised nanocarrier (liposomes encapsulated with doxorubicin) have been attempted which is reviewed in this article.