Liposomes are non-toxic, biodegradable and feebly immunogenic lipid vesicles made from natural and synthetic lipids. They are known to act as immunopotentiating agents and can be used to formulate sustained release preparation by encapsulation. In the present study, liposome entrapped allergen and free allergen were used to inject in Balb/C mice at different time intervals and their immune response in terms of specific IgG and specific IgE levels was quantitated by ELISA (Enzyme Linked Immuno sorbent Assay). The results indicated that specific IgE response was significantly higher in mice injected free allergen as compared to that of mice given liposome entrapped allergen. However, the specific IgG response was not statistically significant. Experiments carried out with liposome entrapped allergen and liposome coupled allergen showed no statistically significant difference in specific IgE and specific IgG titre between the two groups of mice. This type of immunomodulatory effect of liposomes in reducing IgE levels and without affecting IgG levels may be useful in Type I allergic disorders.