Salbutamol sulphate liposomes were generated using ethanolbased proliposomes followed by nebulization using an Aeroneb Pro vibrating-mesh nebulizer. The droplet size, output and fine particle fraction (FPF) of the drug incorporated in liposome formulation were compared to those of a conventional drug solution. Aerosol output was determined gravimetrically and drug output was analyzed by using high performance liquid chromatography. The potential of aerosol deposition in deep lung was evaluated using inertial impaction and laser diffraction. The effect of formulation surface tension on the aerosol performance was studied. Output and FPF were improved using liposomes compared to the conventional solution, for instance, FPF values were 57.85% and 45.81% respectively. The volume median diameter as measured by laser diffraction was respectively 3.44 µm and 3.22 µm; however, the higher FPF of the liposome formulation is justified by the lower polydispersity of its aerosol. The improved aerosol performance using liposomes was attributed to the reduction of surface tension caused by the presence of phospholipid. This is the first study that demons trates the ability of liposomes to improve the nebulized drug output and FPF.