Hypocrellin B (HB) was encapsulated into a phosphatidylcholine liposome. Encapsulation of HB into liposomes not only improved the delivery of this photosensitizer but also increased its photodynamic efficacy compared to free HB molecules. Liposomal HB showed a higher cellular uptake than free HB as measured by confocal microscopy and was internalized into cultured HeLa cells by caveolar endocytosis, which was lipid-raft-dependent. Cell viability measurements demonstrated that liposomal HB was more phototoxic to HeLa cells than free HB as a result of the higher concentration of intracellular HB delivered by the liposomal formulation. The encapsulation of HB influenced the cell death pathway by an increased rate of necrotic cells after irradiation versus free HB, and a Type II (singlet oxygen) mechanism was responsible for the photocytotoxicity.