Diabetes mellitus (DM) is a metabolic disorder resulting from a defect in insulin secretion, insulin action, or both. It is the most common endocrine disorder it is estimated that more than 200 million people worldwide will have DM and 300 million will subsequently have the disease by 2025.I prepared optimized novel elastic liposomal transdermal drug delivery system which would provide sustained delivery of drug for diabetes and improves the site specificity of bioactive drug molecule. Hence enhanced delivery of bioactive molecules through the skin by means of an ultra deformable vesicular carrier open new challenges and opportunities for the development of novel improved therapies. The objective of present investigation was to encapsulate drug in elastic liposomal formulation to improve patient compliance, provide sustained drug delivery and to characterize these preparations for various in vitro and in vivo parameters. The developed formulation would reduce the systemic side effects and prolong the drug release.