In the present investigation, a quality by design (QbD) strategy was successfully applied to the fabrication of chitosan-coated nanoliposomes (CH-NLPs) encapsulating a hydrophilic drug. The effects of the processing variables on the particle size, encapsulation efficiency (%EE) and coating efficiency (%CE) of CH-NLPs (prepared using a modified ethanol injection method) were investigated. The concentrations of lipid, cholesterol, drug and chitosan; stirring speed, sonication time; organic:aqueous phase ratio; and temperature were identified as the key factors after risk analysis for conducting a screening design study. A separate study was designed to investigate the robustness of the predicted design space. The particle size, %EE and %CE of the optimized CH-NLPs were 111.3 nm, 33.4% and 35.2%, respectively. The observed responses were in accordance with the predicted response, which confirms the suitability and robustness of the design space for CH-NLP formulation. In conclusion, optimization of the selected key variables will help minimize the problems related to size, %EE and %CE that are generally encountered when scaling up processes for NLP formulations. The robustness of the design space will help minimize both intra-batch and inter-batch variations, which are quite common in the pharmaceutical industry.