Extracellular vesicles (EVs) are a heterogeneous group of membrane-limited vesicles and multi-signal messengers loaded with biomolecules. Exosomes and ectosomes are two different types of EVs generated by all cell types. Their formation depends on local microdomains assembled in endocytic membranes for exosomes and in the plasma membrane for ectosomes. Further, EV release is a fundamental process required for intercellular communication in both normal physiology and pathological conditions to transmit/exchange bioactive molecules to recipient cells and the extracellular environment. The unique structure and composition of EVs enable them to serve as natural nanocarriers, and their physicochemical properties and biological functions can be used to develop next-generation nano and precision medicine. Knowledge of the cellular processes that govern EVs biology and membrane trafficking is essential for their clinical applications. However, in this rapidly expanding field, much remains unknown regarding EV origin, biogenesis, cargo sorting, and secretion, as well as EV-based theranostic platform generation. Hence, we present a comprehensive overview of the recent advances in biogenesis, membrane trafficking, and functions of EVs, highlighting the impact of nanoparticles and oxidative stress on EVs biogenesis and release and finally emphasizing the role of EVs as nanotherapeutic agents.