The currently existing treatment modalities of cancer suffer from a major drawback of systemic toxicity, which results from high systemic drug exposure. Delivery of chemotherapeutic agents by delivery systems that alleviate systemic side effects but at the same time provide therapeutic advantage by controlling tumor growth exists as a viable option. To achieve this objective, a thermo reversible poloxamer gel containing paclitaxel incorporated in liposomes was formulated at three dose loadings. These paclitaxel loaded formations were injected subcutaneously (s.c.) in Sprague Dawley rats. Blood samples collected at various time points were used in the determination of drug concentration as well as white blood cell and neutrophil counts for the estimation of systemic toxicity of the formulation. Absorption of paclitaxel after s.c. injection occurred slowly with prominence of absorption phase in plasma profile, suggesting presence of flip-flop pharmacokinetics. In spite of increase in dose of paclitaxel administered, no statistically significant increase in plasma levels and pharmacokinetic parameters occurred. Further, no significant increase in hematological toxicity was observed with increased drug exposure to animals. These results show that liposomal poloxamer gels reduce systemic toxicity of paclitaxel even at high doses; and thus, can serve as an effective delivery system for alleviating body burden of this toxic chemotherapeutic agent.