Surface functionalization of liposomes can play a key role in overcoming the current limitations of nanocarriers to treat solid tumors, i.e., biological barriers and physiological factors. The phospholipid vesicles (liposomes) containing anticancer agents produce fewer side effects than non-liposomal anticancer formulations, and can effectively target the solid tumors. This article reviews information about the strategies for targeting of liposomes to solid tumors along with the possible targets in cancer cells, i.e., extracellular and intracellular targets and targets in tumor microenvironment or vasculature. Targeting ligands for functionalization of liposomes with relevant surface engineering techniques have been described. Stimuli strategies for enhanced delivery of anticancer agents at requisite location using stimuli-responsive functionalized liposomes have been discussed. Recent approaches for enhanced delivery of anticancer agents at tumor site with relevant surface functionalization techniques have been reviewed. Finally, current challenges of functionalized liposomes and future perspective of smart functionalized liposomes have been discussed.