In order to target liposomes to the lectin receptors present on macrophages, galactosylated liposomes were prepared and characterized in vitro. O-palmitoylgalactose (OPG) for liposomal coating was synthesized by esterification of galactose with palmitoyl chloride. The galactose binding Ricinus communis lectin was employed as a model system for the determination of in vitro ligand binding capacity. Cellular drug uptake studies were performed using alveolar macrophages. Hematological changes, bone marrow toxicity, plasma and tissue distribution study of free, uncoated plain liposomal and galactosylated liposomal encapsulated azidothymidine (AZT) were determined following a bolus intravenous injection in Sprague–Dawley rats. Lectin (R. communis) carbohydrate interaction has been utilized for the effective delivery of AZT entrapped in galactosylated vesicles. Aggregation of galactosylated liposomes increased as lectin concentration was increased from 5 to 30 μg/ml. Cellular uptake of galactosylated liposomal formulation was maximum. No hematological toxicity was observed even after 10 days in case of galactosylated vesicle entrapped AZT. This formulation maintained a significant level of AZT in tissues rich in galactose specific receptors and had a prolonged residence in the body resulting in enhanced half-life of AZT. Conclusively, galactosylated liposomes are the potential candidate for targeted drug delivery and are anticipated to be promising in the treatment of AIDS6.