Exosomes are nano structured (50-90 nm) vesicles that originate from endosomal compartment of eukaryotic cells and are secreted into extracellular matrix. In recent years, there has been increased interest in exploring exosomes for diagnostic and therapeutic applications. Like many other diseases, e.g., neurodegenerative disorders, autoimmune diseases exosomes have a considerable significance in cancer too. Exosomes are known to prevail in large numbers and carry unique cargos in different types of cancers and thus are proving as versatile entities in understanding their biology of cancers and utilized as efficient diagnostic biomarkers in identification of cancer type. In addition to diagnostic applications, there has been an increased interest in recent years to exploit exosomes as carriers for delivery of therapeutic agents to target sites as well. This is indebted to their exceptional non-immunogenic and biomimetic properties that prompted researchers to use exosomes as carriers for delivery of therapeutic agents, e.g., drugs, genes and peptides. Exosomes also circumvent many drawbacks associated with other lipid or polymeric nanocarriers, e.g., low circulation time, lipid toxicities, long term stability, etc. However, in spite of many favorable aspects of exosome based therapy, there have been a number of challenges too. This review will focus on the current status of the exosome based drug therapy for cancer, the challenges faced and its potential for future clinical use.