A novel optical reporter system was developed to verify encapsulation and subsequent release of a foreign molecule in liposomes. The protocol utilizes a single enzyme and substrate. We encapsulate o-nitrophenyl-beta,d-galactopyranoside (ONPG) and measure its release by detecting the levels of o-nitrophenol created when the encapsulated ONPG is released and hydrolyzed by beta-galactosidase. Using this method, liposome formation and subsequent lysis with Triton X-100 were verified. This new protocol eliminates the complications of multiple reaction enzyme detection methods, along with the chance for false negatives and unreliable data seen when using fluorescent particles as reporters.