Conventional drug delivery system were used for long time.Drug was usually administered in forms such as tablet, capsule, emulsion, suspension etc but administering drug using these conventional dosage form encountered a number of problems.The problems were mainly regarding poor distribution, stability, site delivery etc. most of these problems were solved by using Novel drug delivery system(NDDS). Liposome is one amongst those drug delivery system.With the help of liposomes it was possible to deliver the drug in a controlled manner. Drugs included in the liposomes directly reached to the site of action. With the help of liposomes it was possible to protect the physical and chemical degration. Hydrophillic as well as lipophillic drug could be administered with the help of liposome formulation. Liposomes are long circulating forms and thus it is possible to administer the drug with a sustained release profile. In liposomes as very few excipients , there is no interaction between the drug and polymer. Liposomes are least toxic. Thus because of these many advantages , it is considered as one of the best NDDS. But it also has a number of limitations.