Finasteride (FNS) is a “drug of choice” for benign prostate hypertrophy and prostate cancer. The drug has also been reported to be useful orally in the treatment of some difficult-to-treat androgen-dependent skin disorders, such as seborrhea, acne, hirsutism, and androgenetic alopecia. However, the ideal route for its administration (i.e., topical) remains unexplored. This has logically suggested the search for strategic formulation approaches to make the drug effective on topical applications, hitherto unexplored. The present study targets the encasement of drug molecules in the interiors of vesicular compartments (liposomes) made up of hydrogenated phospholipids, as an attempt toward the development of a trans-epidermal therapeutic system of FNS. Multilamellar drug-loaded liposomes were prepared by thin-film hydration with sonication method and optimized with respect to drug payload, entrapment efficiency, and size by formulating different vesicular compositions under different process conditions. The vesicular systems consisting of saturated phospholipid (100 mg), cholesterol (50 mg), and FNS (5 mg) showed highest drug payload (2.9 mg/100 mg of total lipids), and drug entrapment efficiency (88.6%). Mean (+/-SD) vesicle size of the prepared liposomes was found to be 3.66+/-1.6 microm. Significantly higher skin permeation of FNS through excised abdominal mice skin of FNS was achieved from the liposomal formulations vis-à-vis corresponding solution and conventional gels. Liposomal FNS formulations also showed more than fivefold higher deposition of drug in skin than the corresponding plain drug solution and conventional gel. Stability studies indicated that the liposomal formulations were quite stable in the refrigerated conditions for 2 months with negligible drug leakage or vesicle size alteration during the storage period. Results of the current studies with FNS-loaded vesicular systems project the high plausibility of a topical liposomal formulation for effective localized delivery of Finasteride.