This study innovatively prepared an effectivecapsaicin-loaded liposome, a nanoformulation with fewerirritants, for oral administration. The in vitro and in vivoproperties of the liposomal encapsulation were investigatedand the potential possibility of oral administration evaluated. The liposomal agent composed of phospholipid, cholesterol,sodium cholate and isopropyl myristate was prepared usingfilm-dispersion method. A level A in vitro–in vivo correlation(IVIVC) was established for the first time, which demonstratedan excellent IVIVC of both formulated and freecapsaicin in oral administration. Physicochemical characterizationsincluding mean particle size, zeta (f) potentialand average encapsulation efficiency of capsaicin-loadedliposome were found to be 52.2 ± 1.3 nm, -41.5 ±2.71 mv and 81.9 ± 2.43 %, respectively. In vivo, liposomalencapsulation allowed a 3.34-fold increase in relativebioavailability compared to free capsaicin. The gastricmucosa irritation studies indicated that the liposomal systemwas a safe carrier for oral administration. These resultssupport the fact that capsaicin, an effective drug for thetreatment of neuropathic pain, could be encapsulated inliposome for improved oral bioavailability. The excellentIVIVC of capsaicin-loaded liposome could also be a promisingtool in liposomal formulation development with anadded advantage of reduced animal testing.