Encapsulation of taxol (paclitaxel) by liposomes provides an environment that enhances the solubility of taxol and avoids side effects caused by Cremophor EL, the emulsifier currently used. In this study, a suitable formula and production method for the liposomal delivery system were investigated. A combination of bath-type sonication and passage through ultrafiltration membranes was found to be the best way to produce liposomes particles of uniform size in the range of 100-200 nm. Phosphatidylcholine and phosphatidylglycerol in a 7 : 3 lipid molar ratio together with 40%, cholesterol, 25% a-tocopherol and 3% taxol (in mol/mol lipids), further resulted in liposomes with homogeneous and stable particle sizes. This taxol delivery method was found to have superior therapeutic effects in tests conducted on mice with transplanted Liver tumors in comparison with taxol delivered in ethanol/Cremophor EL formula.