Breast cancer (BC) remains a significant global health challenge, with conventional treatment approaches such as surgery, chemotherapy, and radiation therapy. These approaches face limitations in targeting, toxicity, and efficacy. Liposomal drug delivery systems have emerged as promising tools for targeted breast cancer therapies. Liposomes can encapsulate both hydrophilic and hydrophobic drugs, improve drug distribution, and reduce the side effects. Passive targeting exploits the enhanced permeability and retention effect in tumor tissues, whereas active targeting employs small molecule ligands such as aptamers, folic acid (FA), transferrin, and monoclonal antibodies to specifically bind to overexpressed receptors on cancer cells. Aptamer-functionalized liposomes exhibit high specificity and affinity, folate and transferrin receptor targeting enhances cellular uptake and cytotoxicity, and antibody-conjugated liposomes improve drug delivery and efficacy by targeting specific antigens. Dual-responsive liposomes are sensitive to multiple stimuli and further enhance targeting precision. However, challenges remain, including tumor heterogeneity, limited penetration, and potential immunogenicity. Current research has focused on developing stable and effective formulations and exploring combination-targeting strategies to overcome these limitations. With further advancements, targeted liposomal drug delivery systems hold great promise in improving breast cancer treatment outcomes and reducing adverse effects.