Cell membranes are relatively impermeable to the antibiotic gentamicin, a factor that, along with the toxicity of gentamicin, precludes its use against many important intracellular bacterial infections. Liposomal encapsulation of this drug was used in order to achieve intracellular antibiotic delivery and therefore increase the drug's therapeutic activity against intracellular pathogens. Gentamicin encapsulation in several dipalmitoylphosphatidylcholine (DPPC) and pH-sensitive dioleoylphosphatidylethanolamine (DOPE)-based carrier systems was characterized. To systematically test the antibacterial efficacies of these formulations, a tissue culture assay system was developed wherein murine macrophage-like J774A.1 cells were infected with bacteria and were then treated with encapsulated drug. Of these formulations, DOPE-N-succinyl-DOPE and DOPE-N-glutaryl-DOPE (70:30;mol:mol) containing small amounts of polyethyleneglycol-ceramide showed appreciable antibacterial activities, killing greater than 75% of intracellular vacuole-resident wild-type Salmonella typhimurium compared to the level of killing of the control formulations. These formulations also efficiently eliminated intracellular infections caused by a recombinant hemolysin-expressing S. typhimurium strain and a Listeria monocytogenes strain, both of which escape the vacuole and reside in the cytoplasm. Control non-pH-sensitive liposomal formulations of gentamicin had poor antibacterial activities. A fluorescence resonance energy transfer assay indicated that the efficacious formulations undergo a pH-dependent lipid mixing and fusion event. Intracellular delivery of the fluorescent molecules encapsulated in these formulations was confirmed by confocal fluorescence microscopy and was shown to be dependent on endosomal acidification. This work shows that encapsulation of membrane-impermeative antibiotics in appropriately designed lipid-based delivery systems can enable their use in treating intracellular infections and details the development of a general assay for testing the intracellular delivery of encapsulated drug formulations.