Microemulsions are clear, stable, isotropic mixtures of oil, water, and surfactant, frequently in combination with a cosurfactant. Microemulsions have been intensively studied during the last decades by many scientists and technologists because of their great potential in many food and pharmaceutical applications. The use of microemulsions is advantageous not only due to the facile and low cost preparation, but also because of the improved bioavailability. The increased absorption of drugs in topical applications is attributed to enhancement of penetration through the skin by the carrier. Saturated and unsaturated fatty acids serving as an oil phase are frequently used as penetration enhancers. The most popular enhancer is oleic acid. Other permeation enhancers commonly used in transdermal formulations are isopropyl myristate, isopropyl palmitate, triacetin, isostearylic isostearate, R(+)-limonene and medium chain triglycerides. The most popular among the enhancing permeability surfactants are phospholipids that have been shown to enhance drug permeation in a different mode. l-alpha-phosphatidylcholine from egg yolk, l-alpha-phosphatidylcholine 60%, from soybean and dioleylphosphatidyl ethanolamine which are in a fluid state may diffuse into the stratum corneum and enhance dermal and transdermal drug penetration, while distearoylphosphatidyl choline which is in a gel-state has no such capability. Other very commonly used surfactants are Tween 20, Tween 80, Span 20, Azone, Plurol Isostearique and Plurol Oleique. As cosurfactants commonly serve short-chain alkanols such as ethanol and propylene glycol. Long-chain alcohols, especially 1-butanol, are known for their enhancing activity as well. Decanol was found to be an optimum enhancer among other saturated fatty alcohols that were examined (from octanol to myristyl alcohol). Many enhancers are concentration-dependent; therefore, optimal concentration for effective promotion should be determined. The delivery rate is dependent on the type of the drug, the structure and ingredients of the carrier, and on the character of the membrane in use. Each formulation should be examined very carefully, because every membrane alters the mechanism of penetration and can turn an enhancer to a retarder. Various potential mechanisms to enhance drug penetration through the skin include directly affecting the skin and modifying the formulation so the partition, diffusion, or solubility is altered. The combination of several enhancement techniques such as the use of iontophoresis with fatty acids leads to synergetic drug penetration and to decrease in skin toxicity. Selected studies of various microemulsions containing certain drugs including retinoic acid, 5-fluorouracil, triptolide, ascorbic acid, diclofenac, lidocaine, and prilocaine hydrochloride in transdermal formulations are presented in this review. In conclusion, microemulsions were found as an effective vehicle of the solubilization of certain drugs and as protecting medium for the entrapped of drugs from degradation, hydrolysis, and oxidation. It can also provide prolonged release of the drug and prevent irritation despite the toxicity of the drug. Yet, in spite of all the advantages the present formulations lack several key important characteristics such as cosmetic-permitted surfactants, free dilution in water capabilities, stability in the digestive tracts and sufficient solubilization capacity.