Exosomes are small lipid bilayer-encapsulated nanosized extracellular vesicles of endosomal origin. Exosomes are secreted by almost all cell types and are a crucial player in intercellular communication. Exosomes transmit cellular information from donor to recipient cells in the form of proteins, lipids, and nucleic acids and influence several physiological and pathological responses. Due to their capacity to carry a variety of cellular cargo, low immunogenicity and cytotoxicity, biocompatibility, and ability to cross the blood-brain barrier, these nanosized vesicles are considered excellent diagnostic tools and drug-delivery vehicles. Despite their tremendous potential, the progress in therapeutic applications of exosomes is hindered by inadequate isolation techniques, poor characterization, and scarcity of specific biomarkers. The current research in the field is focused on overcoming these limitations. In this chapter, we have reviewed conventional exosome isolation and characterization methods and recent advancements, their advantages and limitations, persistent challenges in exosome research, and future directions.