Liposomes containing 4-nerolidylcatechol (4-NC), the major metabolite isolated from Pothomorphe umbellata, were obtained and characterized. Influence of liposomal encapsulation on chemical stability of 4-NC and on cytotoxicity profile of this drug was evaluated. Soybean phosphatidylcholine liposomes were prepared by lipid film hydration followed by extrusion. Entrapment efficiency for 4-NC was approximately 92%. Mean diameter of liposomes was 100 nm with a polydispersity index below 0.13. Liposomal 4-NC (L4-NC) and free drug (F4-NC) were submitted to forced degradation assays, monitored by HPLC. Photodegradation assay followed ICH Guidelines, using a photostability chamber equipped with both UV and white light sources. Liposomal encapsulation was able to markedly reduce 4-NC degradation rates under all the conditions tested. L4-NC showed a half-live approximately 15% higher than F4-NC under light exposure. After 72 hours, acid and base hydrolysis of F4-NC lead to 13 and 16% of degradation, respectively. However, no degradation was observed in L4-NC. EPR spectra of liposomal membrane showed that greatest changes in membrane properties were obtained when 5-doxyl stearic acid was used as the spin label, indicating a marked decrease in the fluidity of the bilayer. Following incubation with K562 cells, 4-NC showed a concentration-dependent cytotoxicity profile, while L4-NC exhibited a time and concentration-dependent profile, consistent with a controlled drug release system. F4-NC induced extensive hemolysis under isotonic conditions; conversely liposomal encapsulation protected erythrocytes from 4-NC induced lysis. Liposomal 4-NC resulted in a hemocompatibility and stable formulation, representing a viable drug delivery system to further investigate in vivo performances of 4-NC in pre clinical studies.