Vaccination and drug delivery systems have seen a great revolution since the last few decades. Continuous efforts are being made to develop new drug delivery systems with primary focus on targeted drug delivery. Virosomes are reconstituted viral membranes prepared by removing nucleocapsids from enveloped viruses. The empty virosome lumen is used for encapsulation of compounds such as nucleic acids and drugs. Virosomes retain their fusogenic activity and thus are able to bind to target cell membranes and actively transport encapsulated compounds into the target cell cytosol. Apart from targeted drug delivery, virosomes have been extensively used for the development of highly efficacious vaccines against a range of antigens.They have been used as vaccine candidates against original enveloped virus from which the virosome is made or as carrier vehicle for specific vaccinal antigens derived from viruses and pathogens. In this chapter, production of virosomes with general concept of membrane reconstitution, characterization of virosomes followed by their applications as drug delivery vehicles and vaccines for the induction of humoral and cellular immune responses against encapsulated antigens will be discussed. Applications of virosomes in cancer immunotherapy will also be discussed.