This review paper describes the present knowledge on the interaction of lipophilic, poorly water soluble, drugs with liposomal membranes and the reversibility of this interaction. This interaction is discussed in the context of equilibrium and spontaneous transfer kinetics of the drug, when the liposomes are brought in co-dispersion with other artificial or natural phospholipid membranes in an aqueous medium. The focus is on drugs, which have the potential to partition (dissolve) in a lipid membrane but do not perturb membranes. The degree of interaction is described as solubility of a drug in phospholipid membranes and the kinetics of transfer of a lipophilic drug between membranes. Finally, the consequences of these two factors on the design of lipid based carriers for oral, as well as parenteral use, for lipophilic drugs and lead selection of oral lipophilic drugs is described. Since liposomes serve as model-membranes for natural membranes, the assessment of lipid solubility and transfer kinetics of lipophilic drug using liposome formulations may additionally have predictive value for bioavailability and biodistribution and the pharmacokinetics of lipophilic drugs after parenteral as well as oral administration.