BACKGROUND: Streptococcus mutans is a major contributor to dental caries due to its ability to produce acid and survive in biofilms. Microbial resistance towards common antimicrobial agents like chlorhexidine and triclosan has shifted the research towards antimicrobial Photodynamic therapy (PDT). In this context, Toluidine Blue O (TBO) is being explored for its photosensitizing properties against Streptococcus mutans. There is a huge variation in the effective concentration of TBO among the current studies owing to the differences in source of and delivery system TBO as well as the time, power and energy densities of light. OBJECTIVE: The primary objectives of this study are to encapsulate improved Toluidine Blue O (ITBO) in nanoliposomes (NLITBO), characterize it, and evaluate its antibacterial photosensitizing potential against Streptococcus mutans suspensions in vitro. METHOD: ITBO was synthesised as per Indian patent (number -543908). NLITBO was prepared using the thin-film hydration method. Dynamic light scattering experiment determined the vesicle size, polydispersity index (PDI), and zeta potential. Surface features were characterized by Scanning and Transmission Electron microscopy. ITBO release from NLITBO was assessed using the extrapolation method. The antibacterial activity of the NLITBO was determined by evaluating the zone of inhibition (ZOI) in the Streptococcus mutans culture and comparing with 2% chlorhexidine gluconate. The minimum inhibitory concentration (MIC) of NLITBO as a photosensitizer with red light (wavelength 650nm, power density 0.1 W/cm2, energy density 9-9.1 J/ cm2, 90seconds time) was evaluated against Streptococcus mutans cells by colorimetric method in 96 well plate. RESULTS: Percentage drug loading, loading efficiency, yield percentage, vesicle size, PDI, Zeta potential of NLTBO was reported as 9.3±0.4%, 84.4±7.6%, 73.5%, 123.52 nm, 0.57, -39.54mV respectively. Clusters of uni-lamellar nanovesicles with smooth non-perforated surfaces were observed in SEM and TEM. The size of the vesicle was within 100 nm. At 24 hours, a cumulative 79.81% of ITBO was released from NLITBO. Mean ZOI and MIC of NLITBO (1 μg /ml) were found to be 0.7±0.2 mm, 0.6μg/ml respectively. CONCLUSION: We have synthesized and encapsulated improved Toluidine Blue O (ITBO) in nanoliposomes (NLITBO) and thoroughly characterized the formulation. The antibacterial efficacy of NLITBO without light was demonstrated by ZOI which is similar to 2% chlorhexidine gluconate. MIC of NLITBO as a photosensitiser along with the optimal light parameter was also proposed in this study. These findings suggested that NLITBO could serve as an effective alternative to conventional antibacterial treatments in managing Streptococcus mutans rich biofilms. It can have potential pharmaceutical application in oral health care.