One of the most promising anti-cancer agents paclitaxel, especially effective for treatment of ovarian and breast cancer, suffers from the problems like poor water solubility and low bioavailability. The current formulation available in a non-aqueous vehicle containing Cremophor EL® (polyethoxylated castor oil), on aqueous dilution, when given intravenously, may cause allergic reactions and precipitation. The lack of any appropriate delivery vehicle limits and delays the extensive clinical use of this drug. Hence, the development of alternate paclitaxel formulation with good aqueous solubility and lesser side effects is highly recommended. Researchers have so far explored different techniques including co-solvents, emulsions, micelles, liposomes, microspheres, nanoparticles, cyclodextrins, pastes, and implants. Among all these formulations, liposomes have been found to be highly effective against cancer. The current review encompasses the recent advancements in the delivery of paclitaxel by using liposomes. The focus is on searching future prospective for the safe and effective delivery of paclitaxel.