This review describes the principles of formation and stability of nano-emulsions. It starts with an introduction highlighting the main advantages of nano-emulsions over macroemulsions for personal care and cosmetic formulations. It also describes the main problems with lack of progress on nano-emulsions. The second section deals with the mechanism of emulsification and the dynamic light scattering technique for measurement of the droplet size of nano-emulsions. This is followed by a section on methods of emulsification and the role of surfactants. Three methods are described for nano-emulsion preparation, namely high energy emulsification (using homogenisers), low energy emulsification whereby water is added to an oil solution of the surfactant and the principle of the phase inversion temperature (PIT). A section is devoted to steric stabilisation and the role of the adsorbed layer thickness. The problem of Ostwald ripening (which is the main instability process of nano-emulsions) is described in some detail. The methods that can be applied to reduce Ostwald ripening are briefly described. This involves the addition of a second less soluble oil phase such as squalene and/or addition of a strongly adsorbed and water insoluble polymeric surfactant. The last part of the review gives some examples of nano-emulsions that are prepared by the PIT method as well as using high pressure homogeniser. A comparison of the two methods is given and the rate of Ostwald ripening is measured in both cases. The effect of changing the alkyl chain length and branching of the oil was investigated using decane, dodecane, tertadecane, hexadecane and isohexadecane. The branched oil isohexadcecane showed higher Ostwald ripening rate when compared with a linear chain oil with the same carbon number.