Dynamic dialysis is one of the most common methods for the determination of release kinetics from nanoparticle drug delivery systems. Drug appearance in the "sink" receiver compartment is a consequence of release from the nanoparticles into the dialysis chamber followed by diffusion across the dialysis membrane. This dual barrier nature inherent in the method complicates data interpretation and may lead to incorrect conclusions regarding nanoparticle release half-lives. Although the need to consider the barrier properties of the dialysis membrane has long been recognized, there is insufficient quantitative appreciation for the role of the driving force for drug transport across that membrane. Reversible nanocarrier binding of the released drug reduces the driving force for drug transport across the dialysis membrane leading to a slower overall apparent release rate. This may lead to the conclusion that a given nanoparticle system will provide a sustained release in vivo when it will not. This study demonstrates these phenomena using model lipophilic drug-loaded liposomes varying in lipid composition to provide variations in bilayer permeability and membrane binding affinities. Model simulations of liposomal transport as measured by dynamic dialysis were conducted to illustrate the interplay between the liposome concentration, membrane/water partition coefficient, and the apparent release rate. Reliable determination of intrinsic liposomal bilayer permeability coefficients for lipophilic drugs by dynamic dialysis requires validation of drug release kinetics at varying nanoparticle concentration and the determination of membrane binding coefficients along with appropriate mechanism-based mathematical modeling to ensure the reliability and proper interpretation of the data.