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The human body is a natural habitat for a multitude of microorganisms, with bacteria being the major constituent of the microbiota. These bacteria colonize discrete anatomical locations that provide suitable conditions for their survival. Many bacterial species, both symbiotic and pathogenic, interact with the host via biochemical signaling. Based on these attributes, commensal and attenuated pathogenic bacteria have been engineered to deliver therapeutic molecules to target specific diseases. Recent advances in synthetic biology have enabled us to perform complex genetic modifications in live bacteria and bacteria-derived particles, which simulate micron or submicron lipid-based vectors, for the targeted delivery of therapeutic agents. In this review, we highlight various examples of engineered bacteria or bacteria-derived particles that encapsulate, secrete, or surface-display therapeutic molecules for the treatment or prevention of various diseases. The review highlights recent studies on (i) the production of therapeutics by microbial cell factories, (ii) disease-triggered release of therapeutics by sense and respond systems, (iii) bacteria targeting tumor hypoxia, and (iv) bacteria-derived particles as chassis for drug delivery. In addition, we discuss the potential of such drug delivery systems to be translated into clinical therapies.