Salicylic acid has been used widely in the treatment of dry skin conditions and also helps reduce acne symptoms. However, it suffers from the disadvantages of being a mild to strong irritant. Hence, its control can be achieved through encapsulation in liposomes. Liposomes were prepared by the conventional thin film hydration technique as described by Bangham et al. (J. Mol. Biol., 1965). The prepared liposomal dispersions were then characterized for entrapment efficiency, particle size by transmission electron microscopy (TEM), phase transition studies by differential scanning calorimetry (DSC), and lamellarity by nuclear magnetic resonance (NMR). The results showed the formation of bilayered liposomes in the particle size range of 0.2-0.8276 microm with a maximum entrapment efficiency of 42.6%. The liposomes stored at 4-5 degrees C demonstrated maximum stability as compared to those stored at any other temperature.