Liposomes are spherical vesicles made of phospholipid bilayers that can encapsulate hydrophilic or hydrophobic drugs. There are several methods for manufacturing liposomes including mechanical dispersion methods like film hydration and sonication. Film hydration involves dissolving lipids in an organic solvent to form a thin film, removing the solvent, then hydrating the film. The hydrated lipid sheets self-close to form multilamellar vesicles. Several factors must be considered for liposome preparation including lipid selection, phase transition temperature, charge, and cholesterol content. Liposomes can be classified based on size, lamellarity, surface properties, and method of preparation.