Liposomes are microscopic lipid vesicles consisting of one or more concentric phospholipid bilayers enclosing discrete aqueous spaces. Liposomes provide an apparently nontoxic biological delivery system for hydrophobic and hydrophilic drugs. With few exceptions liposomal antimicrobial drugs are administered intravenously, although other routes have been investigated. Intravenously administered, conventionally prepared vesicles are rapidly cleared from the blood principally by phagocytic cells of the mononuclear phagocyte system (MPS), in particular by macrophages located in the liver (Kupffer's cells) and spleen. The expectation that liposomes would provide a new form of drug carrier capable of diverse physiological selectivity has not been realized. The low endocytotic capacity of many cell types and the inability of liposomes to transverse continuous vascular endothelia have prevented the active targeting of non-MPS tissues with liposomes. Despite their well-documented toxicity and the development of new antimicrobial classes, aminoglycosides continue to have an important antimicrobial role. The encapsulation of aminoglycosides into liposomes may reduce the toxicity associated with the multiple daily administration often required for patients with normal renal function. In addition, the encapsulation of aminoglycosides alters their pharmacokinetics, increases t1/2 and area under the curve, decreases Vd and Cpmax, and causes a shift in drug accumulation from the kidney to other organs, thus potentially reducing nephrotoxicity. Studies demonstrate improved outcome for intracellular infections treated with liposomal aminoglycosides vs. free aminoglycosides. Unresolved questions include what role liposomal aminoglycosides have in the treatment of extracellular infection and whether their sustained release action will promote resistance.