During the past decade formulation of vesicles as a tool to improve drug delivery, has created a lot of interest amongst the scientist working in the area of drug delivery systems. Vesicular system such as liposomes, niosomes, transferosomes, pharmacosomes and ethosomes provide an alternative to improve the drug delivery. Niosomes play an important role owing to their nonionic properties, in such drug delivery system. Design and development of novel drug delivery system (NDDS) has two prerequisites. First, it should deliver the drug in accordance with a predetermined rate and second it should release therapeutically effective amount of drug at the site of action. Conventional dosage forms are unable to meet these requisites. Niosomes are essentially non-ionic surfactant based multilamellar or unilamellar vesicles in which an aqueous solution of solute is entirely enclosed by a membrane resulting from the organization of surfactant macromolecules as bilayer. Niosomes are formed on hydration of non-ionic surfactant film which eventually hydrates imbibing or encapsulating the hydrating aqueous solution. The main aim of development of niosomes is to control the release of drug in a sustained way, modification of distribution profile of drug and for targeting the drug to the specific body site. This paper deals with composition, characterization/evaluation, merits, demerits and applications of niosomes.