Lipid-polymer hybrid nanoparticles (LPN) are an integration or "collaboration" between the two distinct drug delivery platforms of lipid and polymeric carriers. The idea centres on coining the advantages of both materials while attempting to overcome the limitations inherent to each component, thus improving biocompatibility, drug loading, stability, size uniformity, and controlled release properties. Since their emergence over two decades ago, LPN have attracted growing interest in various therapeutic areas such as cancer, neurological disorders, osteoarthritis, and COVID-19 viral infections. Their structural diversity has expanded from the classical polymeric core-lipid shell to its inverse structure of lipid core-polymeric shell and homogeneous lipid-polymer blends, producing nine types of LPN under these structural classes. Correspondingly, preparation strategies have evolved from two-step methods to integrated one-step method of nanoprecipitation, single-emulsification-solvent evaporation, and double-emulsification-solvent evaporation in the early 2010s. More recently, novel methods such as self-assembly, modified ionic gelation, modified ethanolic injection, film rehydration, and hot-melt emulsification have been introduced, with hot-melt emulsification showing particular promise for scalability. In this context, the present review proactively introduces an updated structural classification and proposes a revision of existing formulation strategies by expanding the one-step and two-step framework to incorporate emerging methods tailored for dermatological applications. While LPN are often portrayed as a better version of lipid and polymeric-based nanoparticles, their practical applicability in dermatological treatments remains an open question. Therefore, this review evaluates LPN's clinical and translational potential in dermatology applications such as, wounds, skin infections, dermatitis, psoriasis, skin cancer, pain management, and cosmetic applications.