This work was carried out to construct a novel liposomal azithromycin formulation and examine its antimicrobial effects against Pseudomonas aeruginosa. The liposomal azithromycin formulation was prepared by the dehydration-rehydration vesicle method and its characterizations were tested. The MIC and the MBC of the liposomal formulation were determined by the microbroth dilution method. Liposomal azithromycin activity against biofilm-forming P. aeruginosa was assessed using a Calgary biofilm device. The effect of subinhibitory concentrations of liposomal azithromycin on bacterial virulence factors and motility studies was tested on P. aeruginosa strains. The bacteria and liposome interactions were studied using flow cytometry analysis. The toxicities of the liposomal formulation on erythrocytes and A549 lung cells were evaluated in vitro. The average diameter of the liposomal azithromycin was 406.07 ± 45 nm and the encapsulation efficiency was 23.8% ± 0.2%. The MIC and MBC values of liposomal azithromycin were significantly lower than those of free azithromycin. The liposomal azithromycin significantly reduced the bacteria in the biofilm and attenuated the production of different virulence factors; it also reduced the different patterns of bacterial motilities. By flow cytometry analysis data, it was shown that there are interactions of liposomes with the bacterial membranes. No significant haemolysis or cell toxicity was observed with the liposomal formulation. The results of this research indicate that this novel liposomal azithromycin formulation could be a useful therapy to enhance the safety and efficacy of azithromycin against P. aeruginosa-infected persons.