Colloidal and interfacial phenomena lie at the core of drug formulation, drug delivery, as well as drug binding and action at diseased sites, e.g., in cancer therapy. We review a class of liposome-based drug-delivery systems whose design and functional properties are intimately controlled by the stability of sub-micron structures, lipid-bilayer interfaces, and interfacially activated enzymes that can be exploited to target and deliver drugs. Moreover these drugs can themselves be special lipid molecules in the form of lipid prodrugs that both form the liposomal carrier as well as the substrate for endogenously upregulated lipases that turn the prodrugs into potent drugs precisely at the diseased site.