A modified technique of rapid expansion of supercritical solutions (RESS) was applied to incorporate essential oil extracted from Atractylodes macrocephala Koidz into liposomes. In the modified RESS process, both the liposomal materials and the essential oil were dissolved in the mixture of supercritical carbon dioxide (SC-CO2)/ethanol and then the solution was sprayed into an aqueous medium through a coaxial nozzle to form liposomes suspension. The encapsulation performance of liposomes could be controlled by changing expansion processing conditions such as pressure, temperature of SC-CO2 and the amount of ethanol. The entrapment efficiency, drug loading and average particle size of liposomes were found to be 82.18%, 5.18% and 173 nm, respectively, under the optimum conditions of at a pressure of 30 MPa, a temperature of 338 K and a ethanol mole fraction in SC-CO2 [(x(CH3CH2OH)] of 15%. The formed liposomes appeared as double-layered colloidal spheres with a uniform and narrow particle size distribution. The physicochemical properties of liposomes including entrapment efficiency, dissolution rate and stability were complied with the provisions of Chinese pharmacopoeia. All these results indicate that the modified RESS technique is an innovative way for self-assembly of liposomes incorporation of multi-components extracted from Chinese traditional medicines in the SC-CO2. (C) 2010 The Institution of Chemical Engineers. Published by Elsevier B.V. All rights reserved.