The pulmonary residence time of polymyxin B has been shown to be substantially increased when administered as a liposomal formulation. The use of this system to improve the treatment of cystic fibrosis lung infections requires that the antimicrobial activity of polymyxin B is unaffected by the encapsulation process. To verify that activity against the target organism, Pseudomonas aeruginosa, was retained, the bactericidal activity and MICs of both free and encapsulated polymyxin B were determined. The roles of liposomal surface characteristics in determining interactions with bacterial cell surfaces were also investigated. Encapsulation of polymyxin B was reduced when the positively charged amphiphile, stearylamine (SA) was present, with entrapment efficiencies being lower than with neutral (egg phosphatidylcholine, EPC) or negatively charged (egg phosphatidylcholine:dicetylphosphate, EPC:DCP) formulations (EPC, 45.41% +/- 0.51%; EPC:DCP 9:1, 50.81% +/- 0.79%; EPC:SA 9:1, 31.92% +/- 2.08%, n x 3). The bactericidal activities were compared, and it was found that polymyxin B retained antimicrobial activity after encapsulation. At a polymyxin B concentration of 0.3 mg/L, both positively and negatively charged liposomal polymyxin B formulations, and free drug, killed all cells after 1 h. In contrast, neutral liposome formulations did not significantly decrease the surviving cell fraction. At 0.1 mg/L, fewer cells were killed, and all liposomal formulations produced a reduction in cell numbers, which was not significantly different from free drug. It was found that the MICs of liposomal formulations were attributable to the free drug concentration achieved through release of entrapped polymyxin B. Enhanced activity was seen only with positively charged EPC:SA liposomes and those containing distearoylphosphatidylcholine (DSPC) as the bulk phospholipid. This is likely to be the result of favourable electrostatic interactions and increased liposome:cell ratios respectively. In summary, liposome encapsulation of polymyxin B was not detrimental to antimicrobial activity, and liposome surface properties and release characteristics were important in determining interactions with bacterial cells.