Topical ocular drug delivery has always been a challenging area due to poor ocular bioavailability. Improved drug delivery systems such as liposomes are capable of entrapping both the lipophilic and hydrophilic substances. Therefore, they are effective formulations for drug delivery to targeted structure. PEGylated-liposomes are known to have stealth properties due to their ability of resisting removal by phagocytic cells. This study compares ability of PEGylated-and nonPEGylated-liposomes in delivering lipophilic fluorescent dye, Dil, to several ocular tissues. Sprague-Dawley rats (190-250g) were divided into 2 groups that received unilateral topical application of single drop of PEGylated-liposome (PEG-Lip) or nonPEGylated-liposome (Lip). Contralateral eyes served as control and received no treatment. Animals were sacrificed at several time points, post-instillation, and eyeballs were enucleated. Cryostat sectioning was done and sections were viewed with fluorescence microscope. Fluorescence intensity (FI) was calculated and quantified. In treated eyes, nonPEGylated-liposomes showed faster corneal permeation compared to PEGylated-liposomes. NonPEGylated-liposomes also showed faster availability in ciliary body and retina of treated eyes, possibly a consequence of faster corneal permeation. Their higher engulfment by macrophages and subsequent localization in vascular tissue may also be a contributing factor. In contralateral eyes, both groups showed dye distribution indicating their significant systemic distribution. Higher availability of non-PEGylated-liposomes in contralateral eyes also indicated that they are more likely to undergo phagocytosis and consequently faster removal. In conclusion, PEG-lip showed slower corneal permeation in the treated eyes. Both types of liposomes undergo significant systemic absorption. Since, PEG-lip are more resistant to phagocytosis, they may provide more sustained drug delivery.