The limitations of conventional cancer treatment are driving the emergence and development of nanomedicines. Research in liposomal nanomedicine for cancer therapy is rapidly increasing, opening up new horizons for cancer treatment. Liposomal nanomedicine, which focuses on targeted drug delivery to improve the therapeutic effect of cancer while reducing damage to normal tissues and cells, has great potential in the field of cancer therapy. This review aims to clarify the advantages of liposomal delivery systems in cancer therapy. We describe the recent understanding of spatiotemporal fate of liposomes in the organism after different routes of drug administration. Meanwhile, various types of liposome-based drug delivery systems that exert their respective advantages in cancer therapy while reducing side effects were discussed. Moreover, the combination of liposomal agents with other therapies (such as photodynamic therapy and photothermal therapy) has demonstrated enhanced tumor-targeting efficiency and therapeutic efficacy. Finally, the opportunities and challenges faced by the field of liposome nanoformulations for entering the clinical treatment of cancer are highlighted.