Emulsion is a heterogeneous system consisting of one immiscible liquid dispersed in another in the form of droplets whose diameter in general exceeds 0.1 micron. Such system possesses minimal stability because the droplets quickly coalesce and the two liquids get separated. The stability of the emulsion is increased by adding another substance known as the emulsifying agent or emulsifiers. The liquid droplets are generally known as the dispersed phase or internal phase, whereas the liquid in which they are dispersed is known as the continuous phase, dispersion medium, or external phase. Emulsion increases the stability of many drugs that are unstable in an aqueous solution. It improves the taste of objectionable medicinal agents and makes them more acceptable. It also improves penetration and spreadability. Emulsions enhance the rate and extent of absorption through the alimentary canal, improve the solubility of poorly water-soluble drugs, and can prolong drug action. Examples are liquid paraffin emulsion, cod liver oil emulsion.