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Research dealing with early diagnosis and efficient treatment in colon cancer to improve patient's survival is still under investigation. Chemotherapeutic agent result in high systemic toxicity due to their non‐specific actions on DNA repair and/or cell replication. Traditional medicine such as Lycopodium clavatum (LC) has been claimed to have therapeutic potentials against cancer. The present study focuses on targeted drug delivery of cationic liposomal nanoformulated LC (CL‐LC) in colon cancer cells (HCT15) and comparing the efficacy with an anti‐colon cancer drug, 7‐ethyl‐10‐hydroxy‐camptothecin (SN38) along with its nanoformulated form (CL‐SN38). The colloidal suspension of LC was made using thin film hydration method. The drugs were characterised using ultraviolet, dynamic light scattering, scanning electron microscopy, energy, dispersive X‐ray spectroscopy. Invitro drug release showed kinetics of 49 and 89% of SN38 and LC, whereas CL‐SN38 and CL‐LC showed 73 and 74% of sustained drug release, respectively. Studies on morphological changes, cell viability, cytotoxicity, apoptosis, cancer‐associated gene expression analysis of Bcl‐2, Bax, p53 by real‐time polymerase chain reaction and western blot analysis of Bad and p53 protein were performed. Nanoformulated LC significantly inhibited growth and increased the apoptosis of colon cancer cells indicating its potential anti‐cancer activity against colon cancer cells. [ABSTRACT FROM AUTHOR]