Diabetes is the disease caused due to deficiency of insulin. Antidiabetic drug Gliclazide decreases blood glucose level by inducing insulin. Frequent administration of Gliclazide decreases patient compliance. The present study was aimed to formulate a sustained release formulation of Gliclazide, liposomes. Due to the sustained release property of liposomes it increases patient compliance. Ethanolic injection method without sonication was used to prepare Gliclazide liposomes. Various parameters such as drug encapsulation efficiency, morphological study by optical microscope, SEM and TEM, vesicle size and zeta potential determination, In -vitro drug release & kinetic study and stability studies were evaluated. FT-IR spectral studies and differential scanning calorimetry studieswere used to perform drug excipient compatability study. Liposomes were prepared by using varying concentration of cholesterol in ethanol injection method. The results proved The formulations fulfilled all official requirements. The drug release was slow and sustained for >12 hrs. The formulations followed first order kinetics and release mechanism was non-fickian diffusion.