Herein, we investigated the efficacy of liposomes for the topical delivery of miltefosine (ML) to treat cutaneous leishmaniasis (CL). Liposomes containing varying concentrations of ML (0.5, 1, 2 and 4%) were prepared and characterized by their size and entrapment efficiency. The liposome diameters were between 100-150 nm. The penetration of ML from liposomal formulations through and in the skin was assessed using ex-vivo Franz diffusion cells fitted with mouse skin at 37 °C for 24 h. Data indicated that Lip-ML-4% showed the highest percent of retention across mouse skin (82%). in vitro promastigote and amastigote assays showed that ML and Lip-ML inhibit the growth of parasites either in the culture medium or intracellularly. Lip-ML formulations were topically applied twice a day for 4 weeks to the skin of BALB/c mice infected with L. major. Results showed a significantly (p < 0.001) smaller lesion size in Lip-ML-2 and 4% when compared to controls. At week 8 post-infection, the number of parasites was higher in Lip-ML-0.5% compared to Lip-ML-2 and 4%, however, the difference was not significant. At week 12, the splenic parasite burden was significantly (p < 0.001) lower in mice treated with different Lip-ML formulations when compared to controls. The lesion parasite burden was significantly (p < 0.001) lower in mice treated with either Lip-ML-2 and 4% compared to Lip-ML-0.5% at week 12 post-infection. The results suggested that topical Lip-ML-4% showed optimal ex-vivo penetration and in vivo anti-leishmanial activity against CL caused by L. major when compared to ML cream and other liposomes and thus, merits further investigation.