Azacitidine (AZA), an inhibitor of DNA methyltransferase, is a commonly recognized drug used in clinical treatment for myelodysplastic syndrome and breast cancer. Due to higher aqueous solubility and negative log P of AZA causes poor cancer cell permeation and controlled release. The objective of the present study was to formulate and optimize AZA-loaded liposome (AZA-LIPO) for breast cancer chemotherapy by using Box Behnken design (BBD) and in vitro evaluation using MCF-7 cells. AZA-LIPO were prepared using a thin film hydration technique and characterization study was performed by using FTIR and DSC. The prepared formulations were optimized using BBD and the optimized formulation was further subjected for particle size, surface charges, polydispersity index (PDI), drug loading, entrapment efficiency, TEM, XRD, in-vitro drug release and hemolytic toxicity. The mean particle size of optimized AZA-LIPO was 127 nm. Entrapment efficiency and drug loading of AZA-LIPO was found to be 85.2% ± 0.5 and 6.82 ± 1.6%, respectively. Further, in vitro drug release study showed preliminary burst release in 2 h followed by a sustained release for 36 h in phosphate buffer at different pH (4.0, 5.5, and 7.4) as compared to free drug. Drug release was found to be pH dependent, as the pH was increased, the drug release rate was found to be low. Time-dependent cell viability assay exhibited significant higher cell viability and higher internalization than free AZA in MCF-7 cells. AZA-LIPO were more effective than the free AZA in reducing Bcl2 expression, while increasing pro-apoptotic Bax and caspase-3 activity. The result showed that the formulated biocompatible AZA-LIPO nano-formulations may be used as an efficient anti-cancer drug delivery system for the treatment of breast cancer after establishing preclinical and clinical studies.