Paramagnetic liposomes, spherical particles formed by a lipid bilayer, are able to accommodate a high payload of Gd-containing lipid and therefore can serve as a highly potent magnetic resonance imaging contrast agent. In this paper the relaxation properties of paramagnetic liposomes were studied as a function of composition, temperature and magnetic field strength. The pegylated liposomes with a diameter of approximately 100 nm were designed for favorable pharmacokinetic properties in vivo. The proton relaxivity, i.e. the T1 relaxation rate per mmol of Gd(III) ions, of liposomes with unsaturated DOPC phospholipids was higher than those with saturated DSPC lipids. Addition of cholesterol was essential to obtain monodisperse liposomes and led to a further, although smaller, increase of the relaxivity. Nuclear magnetic relaxation dispersion measurements showed that the relaxivity was limited by water exchange. These results show that these paramagnetic liposomes are very effective contrast agents, making them excellent candidates for many applications in magnetic resonance imaging.