A passive equilibration method which relies on addition of candidate drugs to pre-formed liposomes is described as an alternative method for preparing liposome encapsulated drugs. The method is simple, rapid and applicable to liposomes prepared with high (45mol%) or low (<20mol%) levels of cholesterol. Passive equilibration is performed in 4-steps: (i) formation of liposomes, (ii) addition of the candidate drug to the liposomes in combination with a permeability enhancing agent, (iii) incubation at a temperature that facilitates diffusion of the added compound across the lipid bilayer, and (iv) quenching the enhanced membrane permeability by reduction in temperature and/or removal of the permeabilization enhancer. The method is fully exemplified here using ethanol as the permeabilization enhancer and carboplatin (CBDCA) as the drug candidate. It is demonstrated that ethanol can be added to liposomes prepared with 1,2-distearoyl-sn-glycero-3-phosphocholine (DSPC) and Cholesterol (Chol) (55:45mol ratio) in amounts up to 30% (v/v) with no change in liposome size, even when incubated at temperatures>60°C. Super-saturated solutions of CBDCA (40mg/mL) can be prepared at 70°C and these are stable in the presence of ethanol even when the temperature is reduced to <30°C. maximum CBDCA encapsulation is achieved within 1h after the CBDCA solution is added to pre-formed DSPC/Chol liposomes in the presence of 30% (v/v) ethanol at 60°C. When the pre-formed liposomes are mixed with ethanol (30% v/v) at or below 40°C, the encapsulation efficiency is reduced by an order of magnitude. The method was also applied to liposomes prepared from other compositions include a cholesterol free formulations (containing 1,2-distearoyl-sn-glycero-3-phosphoethanolamine-N-[carboxy(polyethylene glycol)-2000] (DSPE-PEG)) and a low Chol (<20mol%) formulations prepared with the distearoyl-sn-glycero-3-phospho-(1'-rac-glycerol) DSPG)). The cytotoxic activity of CBDCA was unaffected when prepared in this manner and two of the resultant formulations exhibited good stability in vitro and in vivo. The cytotoxic activity of CBDCA was unaffected when prepared in this manner and the resultant formulations exhibited good stability in vitro and in vivo. Pharmacokinetics studies in CD-1 mice indicated that the resulting formulations increased the circulation half life of the associated CBDCA significantly (AUC of CBDCA=0.016μg·hr/mL; AUC of the DSPC/Chol CBDCA formulation=1014.0μg·hr/mL and AUC of the DSPC/DSPG/Chol CBDCA formulation=583.96μg·hr/mL). Preliminary efficacy studies in Rag-2M mice with established subcutaneous H1975 and U-251 tumors suggest that the therapeutic activity of CBDCA is improved when administered in liposomal formulations. The encapsulation method described here has not been disclosed previously and will have broad applications to drugs that would normally be encapsulated during liposome manufacturing.