Polysaccharide coated liposomes were prepared, characterized and evaluated for their potential use in oral immunization. Liposomes were prepared by reverse phase evaporation method. Bovine serum albumin (BSA) was chosen as the model antigen. Pulluan, a naturally occurring polysaccharide produced by a yeast like fungus, was chemically modified into its palmitoyl derivative (O-palmitoylpullulan; OPP) and was used for coating of the liposomes. The synthesized OPP was characterized by IR and NMR spectroscopy. The liposomes prepared were characterized for their size, shape, surface charge, encapsulation efficiency and stability in simulated gastric fluid. The immune stimulating activity was studied by measuring the serum IgA and IgG following oral administration of the prepared polysaccharide coated liposomes. Similarly, other formulations were studied and the results were compared. BSA loaded liposomes coated with OPP and plain polysaccharide could produce better IgG and IgA titre levels as compared to plain alum adsorbed BSA. The plain liposomes containing BSA could however produce significantly higher IgG and IgA levels as compared to equivalent BSA-alum based oral immunization. The results indicate that chemically modified polysaccharide coated liposomes can be used as a potential adjuvants for effective oral immunization. (C) 2000 Elsevier Science B.V. All rights reserved.