The present investigation deals with the preparation and evaluation of sustained release system of Salbutamol sulphate for the treatment of Asthama. The liposomes of Salbutamol sulphate were prepared using physical dispersion method by using soyalecithin and cholesterol. The ratio of soyalecithin and cholesterol was found to be important factors for achieving sustained release pattern. Factors studied influenced the lag time and in-vitro drug release of formulations. Dissolution studies of liposomes in phosphate buffer with pH 7.4 shows the drug release in colon could be modulated by optimizing the concentration of soyalecithin and cholesterol (6:1). The results of in-vitro dissolution studies indicated that formulation F1 is the most successful formulation of the study and exhibited drug release 96.24% in 12 h and the total release pattern was very close to the theoretical release profile of sustained release system. The study showed that the optimised batch F1 fulfills the requirement of good liposomal formulation. Stability study of the optimized formulation indicates no significant difference in release profile after a period of two month. Key words: Sustained release system, Soya lecithin: Cholesterol, Salbutamol sulphate, Liposomes