Cyclophosphamide is an alkylating agent extensively used as an anticancer chemotherapeutic agent. However, the genotoxic and mutagenic effect of Cyclophosphamide is still the primary limitation for wide application. Conventional chemotherapy Cyclophosphamide used to treat various types of cancers and few autoimmune disorders. Liposomes, a phospholipid bilayer vesicular system is extensively being used and studied for drug delivery applications in cancer therapy. The reason behind is advantages that liposomes offer such as their biocompatible and versatility of efficiently encapsulating both hydrophilic and hydrophobic drugs. Liposomes have been used to improve the therapeutic index of new or established drugs by modifying drug absorption, reducing metabolism, prolonging biol. half-life or reducing toxicity. Drug distribution is then controlled primarily by properties of the carrier and nolonger by physico-chem. characteristics of the drug substance only. Therefore, in the present study the Cyclophosphamide loaded liposomes were developed by passive loading method using lipids Phospho lipids and cholesterol, which is able to encapsulate Cyclophosphamide. The prepared Cyclophosphamide Liposomes physicochem. parameters characterized for shape, percent drug content, % entrapment efficiency, particle size, zeta potential, Osmolality, In-vitro drug release and stability studies of the Liposomes. The Cyclophosphamide Liposomes morphol. by TEM showed spherical shape with a mean average size of 84 μm. These results revealed that, Liposomal formulation could be a valuable carrier for the delivery for chemotherapy. The stability studies performed as per ICH guidelines.