Ultrasound, which has been conventionally used for diagnostics until recently, is now being extensively used for drug and gene delivery. This transformation has come about primarily due to ultrasound-mediated acoustic cavitation - particularly transient cavitation. Acoustic cavitation has been used to facilitate the delivery of small molecules, as well as macromolecules, including proteins and DNA. Controlled generation of cavitation has also been used for targeting drugs to diseased tissues, including skin, brain, eyes and endothelium. Ultrasound has also been employed for the treatment of several diseases, including thromboembolism, arteriosclerosis and cancer. This review provides a detailed account of mechanisms, current status and future prospects of ultrasonic cavitation in drug and gene delivery applications.