In the late 1970s liposome-entrapped insulin was administered by the oral route to both normal and diabetic animals. Results showed that small but significant amounts of insulin could reach the circulation. However, different liposome compositions gave varied results and no mechanism of absorption was elucidated. Subsequent in vitro studies suggested that many liposome compositions used were unstable in the conditions prevailing in the gastrointestinal tract. Using more stable liposomes in an everted gut system, it has been demonstrated that liposomes were pinocytosed by intestinal epithelial cells and transferred to the serosal side of the gut. Recent studies both in vitro and in vivo show that there may be the possibility of enhancing the uptake process to deliver a range of drugs by the oral route.