The objective of present research work is to develop liposomes as a carrier system for methanolic extract, its incorporation in to gel formulations and to characterize the prepared and develop liposomal gel formulation. Formulation was carried out by thin film technique. Scanning electron micrograph of the prepared nanosponges at 50.00 kx magnification showed that the liposome was porous with a smooth surface morphology and spherical shape. The porous nature of liposome was clearly observed in the SEM images. Particle size and zeta potential was determined by Malvern Zeta sizer. The particle size analysis confirmed that the prepared sample were in the nanometer range. Average particle size obtained for the formulations F1 to F5 were 162.7 nm to 195.6 nm. Zeta potential values of liposome indicated that the formulated liposomes are stable. The amount of drug being entrapped in liposome was calculated and all the prepared liposome was found to possess very high entrapment efficiency. The viscosity of liposome loaded gel is found to 6842±0.32cps. The pH of liposome loaded gel is 6.3 and spreadability is 12.11, indicating that liposome loaded gel has high release and permeability. The in vitro anti-inflammatory effect of Neolamarckia cadamba extract was evaluated against denaturation of egg albumin. The present findings exhibited a concentration dependent inhibition of protein (albumin) denaturation by Neolamarckia cadamba throughout the concentration range of 20-100μg/ml. Diclofenac sodium (at the concentration range of 20-100 μg/ml) was used as reference drug which also exhibited concentration dependent inhibition of protein denaturation; however, the effect of diclofenac sodium was found to be less active when compared with extract name. Moreover, the results demonstrated that the liposome-based drug delivery approach could be a valuable tool to improve the therapeutic efficacy of phytochemicals by improving their absorption, and bioavailability via altering their physicochemical and release properties. Keywords: Liposomes, Neolamarckia cadamba, Qualitative phytochemical screening, Thin film technique, In vitro anti-inflammatory activity.