Functional cosmetics represent a rapidly growing segment of the skincare industry, driven by consumer demand for evidence-based products with proven efficacy. This review explores the development of efficacy-driven formulations, focusing on bioactive screening, alternative testing models, and the integration of traditional medicine. We discuss the role of nanotechnology in enhancing the delivery of active ingredients and the importance of clinical validation in substantiating product claims. The convergence of cosmetic science with dermatology and pharmacology is paving the way for innovative, multifunctional skincare solutions.