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Transdermal drug delivery systems (TDDS) have gained significant attention as a non-invasive and effective approach for systemic and localized drug delivery. However, the primary limitation of this route is the barrier function of the stratum corneum, which restricts drug permeation. To overcome this challenge, ultra-deformable vesicular carriers such as transethosomes have been developed. Transethosomes are advanced lipid-based nanocarriers composed of phospholipids, high concentrations of ethanol, and edge activators, integrating the advantages of both ethosomes and transfersomes. These vesicles exhibit superior deformability, enabling them to penetrate through narrow intercellular pathways of the skin and deliver drugs into deeper layers. The presence of ethanol enhances skin permeability by fluidizing the lipid bilayer, while edge activators improve vesicle flexibility and stability. As a result, transethosomes demonstrate enhanced drug entrapment efficiency, improved permeation, and increased bioavailability compared to conventional liposomes and other vesicular systems. Various preparation techniques such as cold method, hot method, thin-film hydration, and reverse-phase evaporation are employed for their formulation. Key characterization parameters including particle size, polydispersity index, zeta potential, and entrapment efficiency are critical for evaluating their performance. Transethosomes have been widely explored for the delivery of diverse therapeutic agents such as antifungal, anti-inflammatory, antihypertensive, and anticancer drugs. Despite their promising advantages, certain limitations such as formulation instability and potential skin irritation due to high ethanol content need to be addressed. Overall, transethosomes represent a novel and efficient ultra-deformable vesicular carrier system with great potential to enhance transdermal drug delivery and improve therapeutic outcome.