Background: Intrapleural administration of compounds is a lung targeted, innovative therapeutic strategy for mesothelioma, which can be refined as a route for drug delivery that minimizes the potential for systemic toxicity. However, little is currently known about the retention of liposomal drugs at the site, after such topical administration. Purpose: To evaluate the retention of liposomes in lungs following intrapleural injection, and how this might be modulated by liposome properties and disease progression. Methods: DiR-incorporating liposomes with various lipid compositions and sizes were prepared, characterized (for size distribution and zeta potential) and injected intrapleurally in normal mice and mice with malignant pleural effusion (MPE). DiR retention in pleural cavity was followed by biofluorescence imaging. Results: Experimental results demonstrate that liposome size and PEG-coating, have a significant effect on residence time in the pleural cavity; negative surface charge does not. More than 20% liposomal-DiR is retained 24 d post-injection (in some cases), indicating the high potential towards localized diseases. Ex-vivo liposomal-DiR signal in tumors of MPE mice was similar to signal in liver, suggesting high tumor targeting potential of intrapleurally injected liposomes. Finally, no difference was noticed in liposomal-DiR retention between tumor-inoculated (MPE) and healthy mice, indicating the stability of liposomes in the presence of effusion (in MPE mice). Conclusion: The current study provides novel insights for using liposomes by intrapleural administration for the treatment of lung diseases.