A methodology has been developed to evaluate the disposition of liposome-encapsulated epinephrine and inulin in the conjunctival sac and selected ocular tissues. Relative to inulin, epinephrine effluxed much more rapidly from liposomes and disappeared more rapidly from the tear pool. As a result, liposomes were found to exert opposite effects on the ocular uptake of epinephrine and inulin. Over a period of 45 minutes, the concentration of epinephrine in the eye was 1.5-3 times lower when presented in liposomes than in aqueous solutions. This contrasted with the 3 to 15 fold increase in inulin concentration in the eye from liposomal preparations of the compound. Specifically, much of the increase in inulin concentration in the cornea can be attributed to an increase seen in the epithelium. Despite elevated inulin concentrations in the ocular tissues it bathes, the aqueous humor was devoid of inulin unless the corneal epithelium was physically removed prior to topical dosing. Collectively, these findings suggest that both the manner in which an entrapped compound interacts with the constituents of liposomes and the manner in which liposomes interact with the absorptive surfaces of the eye can significantly influence its pharmacokinetics in the eye.