Targeted drug delivery has emerged as a pivotal approach within precision medicine, aiming to optimize therapeutic efficacy while minimizing systemic side effects. Advanced biomimetic membrane-coated formulations have garnered significant interest from researchers as a promising strategy for targeted drug delivery, site-specific accumulation and heightened therapeutic outcomes. Biomimetic nanotechnology is able to retain the biological properties of the parent cell thus are able to exhibit superior targeting compared to conventional formulations. In this review, we have described different types of cell membrane camouflaged NPs. Mechanism of isolation and coating of the membranes along with the applications of each type of membrane and their mechanism to reach the desired site. Furthermore, a fusion of different membranes in order to prepare hybrid membrane biomimetic NPs which could possess better efficacy is discussed in detail in the review. Later, applications of the hybrid membrane-cloaked NPs along with current development were discussed in detail along with the challenges associated with it. Although membrane-cloaked NPs are currently in the preliminary stage of development, there is a huge potential to explore this biodegradable and biocompatible delivery system.