Maximum duration of bronchodilator efficacy in inhaled liposome-based formulations depends on optimizing the in vivo release rate of the encapsulated bronchodilator. We investigated the effect of several formulation variables on the pulmonary residence time of 3H-terbutaline sulfate liposomes administered intratracheally in guinea pigs, using an improved method enabling the measurement of pulmonary drug absorption for extended periods of time in conscious animals. Half-lives of liposome-encapsulated 3H-terbutaline disappearance from the lungs and airways after instillation ranged from 1.4 to 18 hr and were markedly affected by liposome size, cholesterol content, and phospholipid composition. This study demonstrates that liposomes can significantly prolong the residence time of bronchodilators in the lungs and that precise control over the pulmonary residence time of encapsulated bronchodilators can be achieved by controlling formulation variables.