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The objectives of this research work were to develop optimized nanoparticulate formulations of poly (d,l-lactic-co-glycolic acid) (PLGA) (85:15) with an anti-AIDS drug stavudine and to evaluate their in- vitro uptake by the macrophages and hepatotoxicity in- vivo. Nanoparticles were prepared by nanoprecipitation method based on a factorial design with varying parameters such as the amounts of polymer and stabilizer used. Physicochemical characterizations such as drug -excipient interaction, surface morphology, particle size, and zeta potential measurements were carried out. The best formulation was selected and tagged with fluorescein isothiocyanate (FITC) for cellular uptake study of the formulation. In- vitro uptake of nanoparticles by macrophages was carried out. Formulation-induced hepatotoxicity was assessed by analyzing some serum hepatotoxic parameters and hepatic histology following 10-day treatment in comparison with the free drug. Nanoparticles exhibited smooth surface with particle size 84-238 nm, high entrapment efficiency (approx 85%), and negative surface charge. Formulations showed a sustained drug release pattern over the study period. In- vitro uptake study by macrophages exhibited a time-dependent profile. In- vivo studies on rats showed improvement in the serum parameters and maintenance of the integrity of the hepatic architecture indicating decreased hepatotoxicity with the formulations as compared to the free drug. The experimental results showed a positive outcome in the development of antiretroviral drug carrier exhibiting sustained drug release, macrophage-targeted delivery characteristics, and having reduced hepatoxicity. This could be beneficial for the management of early stage of HIV infection besides reducing the drug load for effective treatment, thereby offering an attractive option in AIDS therapy. [ABSTRACT FROM AUTHOR]