Abstract. The purpose of this study was to prepare and characterize an ocular effective prolonged-release liposomal hydrogel formulation containing ciprofloxacin. Reverse-phase evaporation was used for preparation of liposomes consisting of soybean phosphatidylcholine (PC) and cholesterol (CH). The effect of PC/CH molar ratio on the percentage drug encapsulation was investigated. The effect of additives such as stearylamine (SA) or dicetyl phosphate (DP) as positive and negative charge inducers, respectively, were studied. Morphology, mean size, encapsulation efficiency, and in vitro release of ciprofloxacin from liposomes were evaluated. For hydrogel preparation, Carbopol 940 was applied. In vitro transcorneal permeation through excised albino rabbit cornea was also determined. Optimal encapsulation efficiency of 73.04±3.06% was obtained from liposomes formulated with PC/CH at molar ratio of 5:3 and by increasing CH content above this limit, the encapsulation decreased. Positively charged liposomes showed superior entrapment efficiency (82.01±0.52) over the negatively charged and the neutral liposomes. Hydrogel containing liposomes with lipid content PC, CH, and SA in molar ratio 5:3:1, respectively, showed the best release and transcorneal permeation with the percentage permeation of 30.6%. These results suggest that the degree of encapsulation of ciprofloxacin into liposomes and prolonged in vitro release depend on composition of the vesicles. In addition, the polymer hydrogel used in preparation ensure steady and prolonged transcorneal permeation. In conclusion, ciprofloxacin liposomal hydrogel is a suitable delivery system for improving the ocular bioavailability of ciprofloxacin.