OBJECTIVE: To develop a procedure for preparing paclitaxel encapsulated PEGylated liposomes. METHODS: The membrane hydration followed extraction method was used to prepare PEGylated liposomes. The process and formulation variables were optimized by "Box-Behnken Design (BBD)" of response surface methodology (RSM) with the amount of Soya phosphotidylcholine (SPC) and PEG2000-DSPE as well as the rate of SPC to drug as independent variables and entrapment efficiency as dependent variables for optimization of formulation variables while temperature, pressure and cycle times as independent variables and particle size and polydispersion index as dependent variables for process variables. The optimized liposomal formulation was characterized for particle size, Zeta potential, morphology and in vitro drug release. RESULTS: For entrapment efficiency, particle size, polydispersion index, Zeta potential, and in vitro drug release of PEGylated liposomes was found to be 80.3%, (97.15 ± 14.9) nm, 0.117 ± 0.019, (-30.3 ± 3.7) mV, and 37.4% in 24 h, respectively. The liposomes were found to be small, unilamellar and spherical with smooth surface as seen in transmission electron microscopy. CONCLUSION: The Box-Behnken response surface methodology facilitates the formulation and optimization of paclitaxel PEGylated liposomes.