Aim: To evaluate the applicability of Limulus amebocyte lysate (LAL) assay for endotoxin determination in lipid compounding liposomal nanoformulations.Materials & methods: Spiked cholesterol, hydrogenated soy phosphatidylcholine and 1,2-distearoyl-sn-glycero-3-phosphoethanolamine-N-[amino(polyethylene glycol)-2000] (DSPE-PEG 2000) samples with endotoxins, simulating contaminated samples or in-process contamination were analyzed by chromogenic LAL assay.Results: Recovery of spiked endotoxins was achieved from DSPE-PEG 2000 suspended in water, whereas recovery was not achieved from spiked cholesterol and hydrogenated soy phosphatidylcholine suspended in methanol, and from multilamellar vesicles. Conclusion: Endotoxins, when in contact with organic solvents, no longer react in the LAL assay as they do in aqueous media. This indicates limitations of the LAL assay for endotoxin control in raw materials for liposomal nanoformulations.