Abstract The development of liposomal formulations for aerosol delivery with jet nebulizers has expanded the possibilities for effective utilization of aerosol based therapies in the treatment of pulmonary diseases. The property of sustained release or depot effect of liposomes has been studied using different tracer molecules to monitor absorption and clearance of liposomes from the lung. With liposomal drug formulations, few studies have simultaneously monitored phamacokinetics of both the phospholipid carrier and the therapeutic agent. We have developed a cyclosporin A (CsA)-dilauroylphosphatidylcholine (DLPC) liposomal formulation for aerosol delivery to the lung. Recent studies of CsA-liposomes have reported that CsA displays a unique property of rapid bilayer membrane exchange with dissociation between CsA and its liposome carrier in vivo following intravenous delivery. The purpose of this study was to determine the pharmacokinetics of both CsA (determined by HPLC) and liposomal carrier (labeled with 99mtechnetium ( 99mTc)) to study potential dissociation after delivery to normal mouse lungs. Furthermore, the effects of pulmonary inflammation on the clearance of CsA-DLPC liposomes were compared with 99mTc labeled human serum albumin (HSA). Results indicate that 99mTc-DLPC liposome carrier is retained up to 16.9 times longer than the CsA half-life in normal lung and 7.5 times longer in inflamed lungs. Similar values were obtained for 99mTc-labeled albumin (14.8 times for normal CsA half life (6.8 times in inflamed lungs)). These pharmacokinetic results help to delineate the most effective therapeutic regimens for pulmonary CsA-liposome aerosol delivery.