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Recent years have witnessed an enormous spike in interest in cell-derived particles (CDPs) that are also called Extracellular vesicles (EVs) due to their potential uses in both treatments and diagnostics. Small vesicles or particles, including apoptotic bodies, microvesicles, and exosomes, are released from both healthy and sick cells. They carry bioactive substances from their parent cells and transfer this cargo to target cells making them potential candidates for therapeutic interventions and diagnostic applications. These phospholipid-enclosed nanovesicles have multiple benefits over other carriers of biological materials, including high biocompatibility, high circulation stability, core propensity to target cells, low immunogenicity, ability to shield payload from degradation and biological barrier-crossing properties that make them unique. Cell-derived particles are used for evaluating treatment efficacy in addition to treating diseases by tracking changes in the payload composition of extracellular vesicles over time as real-time monitoring, thus treatment plans can be improved and patient outcomes can be forecast. Moreover, extracellular vesicles have gained attention as possible biomarkers because of their capacity to hold and transport biomolecules, and many biomarkers which might provide important details about cellular functions and the onset of illness. Cell-derived particles reflect the condition of the parent cell, making them an excellent source of biomarkers for a variety of illnesses. They can reveal information about the existence and course of illnesses and serve as a noninvasive substitute for conventional tissue biopsies. This review highlights the potential of Extracellular vesicles (EVs) as drug delivery carriers and as novel non-invasive molecular diagnostic tools for the prognosis of fatal illnesses. This article reveals the fundamental characteristics of EVs, the types of EVs, characteristics of EVs as biomarkers. Further, challenges in the isolation and characterization of extracellular vesicles, and applications of extracellular vesicles in drug delivery, are also succinctly summarized in this review article.