Zidovudine is an antiretroviral drug with activity against Human Immunodeficiency Virus (HIV) Type 1. However, only temporary and limited benefits are observed in HIV infected patients treated with zidovudine alone or in combination to decrease viral burden, the rapid development of resistance have limited their long term efficacy. Hence, in the present work an attempt is being made to provide for stable drug delivery system with or having improved therapeutic index for zidovudine in form of lyophilized liposomes. Liposomes have been loaded by zidovudine (AZT) as a model drug using thin film hydration technique for targeted delivery of this drug. Four different formulations were prepared with various concentrations of egg phosphatidylcholine (EPC) and dipalmitoyl phosphatidylcholine (DPPC). A series of tests have been carried out to characterize the carrier vesicles in vitro, including loading parameters, drug release kinetics, particle size distribution, SEM analysis. Liposomes having acceptable loading parameters, released their drug content according to zero-order kinetics were selected for in vivo tissue distribution study. The AZT-loaded liposomes showed preferential drug targeting to liver followed by lungs, kidney and spleen. Totally, AZT-loaded liposomes seem to be a promising delivery system for targeting the drug to reticuloendothelial system (RES).