Lipospheres which represent novel drug delivery vehicles are water-insoluble lipid spheres forming a solid hydrophobic core, with a layer of phospholipids embedded on the surface of the core. Drugs or other biologically active agents may be contained in the hydrophobic core, adhered to the phospholipids, or a combination thereof. Lipid based carrier system (lipospheres) was adopted to eliminate the toxic effects associated with the use of polymers as carrier and entrapment of high amount of poorly bioavailable lipophilic compound. Due to its poor aqueous solubility of Pioglitazone HCl, was selected as drug candidate to develop lipospheres employing the melt dispersion technique. The Pioglitazone HCl - loaded lipospheres were found to be an effective natural carrier in terms of discrete particle size, encapsulation efficiency, and satisfactory in vitro release characteristics. In the presence of cetyl alcohol, the incorporated phospholipid could combine with drug by hydrophilic and hydrophobic interactions, consequently improved the drug entrapment efficiency and produced the sustained release rate.