Colorectal carcinoma (CRC) is one of the most common cancers and is the leading cause of cancer deaths in much of the developed world. Owing to the high incidence of drug resistance and potential toxic effects of chemotherapy drugs, much research is currently underway to design better strategies for smart drug delivery systems. Cyclooxygenase-2 (COX-2) pathway is associated with poor prognosis in colon carcinomas. The selective COX-2 inhibitor drug Celecoxib (CLX) has been shown to posses COX-2 independent anti-carcinogenic effects in addition to inhibition of prostaglandins synthesis. The aim of the presented thesis was to develop a liposomal delivery system for CLX and to evaluate functional effects in CRC cell lines. Starting with multilamellar vesicles capable of CLX encapsulation and retention, nano sized liposomes were prepared and characterized in vitro. The optimum composition was determined as 10:1 DSPC: Cholesterol molar ratio and Polyethylene glycol (PEG) grafting at 2% of phospholipids. The extent of cellular association of PEGylated liposome formulation was analyzed quantitatively and cellular localization was analyzed qualitatively. We detected that CLX loaded PEGylated liposomes inhibited proliferation and cellular motility of cancer cells in a 2D model system. Our results showed that, Epidermal Growth Factor Receptor (EGFR) targeted CLX loaded immunoliposomes were extremely cytotoxic in cancer cells with high EGFR expression but not in cells devoid of EGFR expression. This delivery system may pioneer studies that may potentially circumvent the harmful systemic side effects of cancer preventive and chemotherapy drugs as well as allow the use of targeted combinatorial therapies.