The function of the brain can be affected by various factors that include infection, tumor, and stroke. The major disorders reported with altered brain function are Alzheimer's disease (AD), Parkinson's disease (PD), dementia, brain cancer, seizures, mental disorders, and other movement disorders. The major barrier in treating CNS disease is the blood-brain barrier (BBB), which protects the brain from toxic molecules, and the cerebrospinal fluid (CSF) barrier, which separates blood from CSF. Brain endothelial cells and perivascular elements provide an integrated cellular barrier, the BBB, which hamper the invasion of molecules from the blood to the brain. Even though many drugs are available to treat neurological disorders, it fails to reach the desired site with the required concentration. In this purview, liposomes can carry required concentrations of molecules intracellular by diverse routes such as carrier-mediated transport and receptor-mediated transcytosis. Surface modification of liposomes enables them to deliver drugs to various brain cells, including neurons, astrocytes, oligodendrocytes, and microglia. The research studies supported the role of liposomes in delivering drugs across BBB and in reducing the pathogenesis of AD and PD. The liposomes were surface-functionalized with various molecules to reach the cells intricated with the AD or PD pathogenesis. The targeted and sustained delivery of drugs by liposomes is disturbed due to the antibody formation, renal clearance, accelerated blood clearance, and complement activation-related pseudoallergy (CARPA). Hence, this review will focus on the characteristics, surface functionalization, drug loading, and biodistribution of liposomes respective to AD and PD. In addition, the alternative strategies to overcome immunogenicity are discussed briefly.