This study was directed towards the preparation and optimization of PEGylated (PEG, poly(ethylene glycol)) estradiol benzoate (ESB)-loaded liposomes to be used for the treatment of restenosis by local vascular delivery. Various liposomal formulations were prepared by thin film hydration method followed by soni-cation. Response surface methodology was applied to study the influence of three different independent variables, on the response of entrapment efficiency (%EE). Liposomes were characterized in terms of size, zeta potential, %EE and release profile. Incorporation of ESB was higher in egg phosphatidylcholine (EPC) liposomes, whereas the drug was displaced from liposomes, as the cholesterol (Chol) content of liposome increased. The optimum formulation composed of EPC/dioleyloxy trimethylammonium propane/distearoylphosphatidylethanolamine-PEG2000 with a molar proportion of 8.5:1:0.5 had the highest EE. In vivo studies in the balloon-injured rat carotid arteries revealed the potential of ESB-loaded liposomes as efficient local and controlled drug delivery systems to reduce restenosis.