Microemulsions are one of the best candidates as novel drug delivery system because of their long shelf life, improved drug solubilization with ease of preparation and administration. Microemulsions are thermodynamically stable and optically isotropic liquid solutions of oil, water and amphiphile. They have emerged as novel vehicles for drug delivery which allow controlled or sustained release for ocular, percutaneous, topical, transdermal, and parenteral administration of medicaments. Microemulsions can be easily distinguished from normal emulsions by their low viscosity, transparency and more accurately their thermodynamic stability. Microemulsions have great range of applications and uses such as in pharmaceuticals, agrochemicals, cutting oils, biotechnology, food, cosmetics, analytical applications, environmental detoxification etc. The main objective of this review paper is to discuss microemulsions as drug carrier system with other possible applications. Microemulsions have emerged as novel vehicles for drug delivery which allow sustained or controlled release for percutaneous, topical, transdermal, ocular and parenteral administration of medicaments. Topical microemulsion offer the advantage of spontaneous formation, ease of manufacturing, thermodynamic stability, improved drug solubilization of hydrophobic drugs and increase bioavailability.