The aim of this article is to evaluate the role and safety of laparoscopic management of hydatid disease of liver using Palanivelu hydatid system (PHS) 1 with initial results. A prospective study of hepatic hydatid cyst underwent laparoscopic management using PHS, during the period from June 2008 to October 2010, in department of general surgery in a tertiary care institute. Selective patients were included in our study. Preoperatively 2 weeks and post operatively 6 weeks of Albendazole were given. All patients underwent surgery under general anesthesia. Hydatid cyst evacuation and omentoplasty were done with PHS system to prevent spillage. Cyst was irrigated with 2 % savlon. Drainage tube was kept near the cyst. There were 32 patients with 35 liver hydatid cysts operated. The mean operative time was 93.78 (70-180) min. Intraoperative complications were noted in two patients (6.2 %). Conversion was required in one patient (3.1 %). The mean duration of hospital stay was 3-10 days with an average of 5 days. There was no recurrence in mean follow-up of 3 years. There was no mortality with good subjective and objective cosmetic results. The laparoscopic cyst evacuation and omentoplasty using PHS are feasible and safe for treating the hydatid cyst of liver in selected patients. It aids early recovery with good cosmetic results.