Liposomes are spherical lipid carrier vesicles that vary in size (typically in the range of 20. nm to 20. μm), and are composed of single or multi-concentric bilayers, and have the ability to entrap both hydrophilic therapeutic agents within their central aqueous core or lipophilic drugs within their bilayer compartment. These carriers can transport drugs to particular sites of action within the pulmonary system by employing specially designed delivery devices. These devices work through specific mechanisms and their performance depends upon the formulation. Dry powder inhalers deliver dry powdered formulations. By contrast, pressurized metered dose inhalers deliver liquid formulations when an appropriate liquefied propellant is included. However, nebulizers are capable of delivering aqueous suspensions or solutions with no need for inclusion of a propellant. Liposomes were first reported in 1965 and since then significant developments in liposome research have emerged. Liposomes are now well established as carrier systems that accommodate therapeutic agents and deliver them to various sites in the body. Liposomes can sustain the release of the entrapped therapeutic materials, hence enhancing the therapeutic outcome. Liposome carrier systems have been studied extensively for prophylaxis against and the treatment of pulmonary diseases.