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The liposomal amphotericin B (AmB) formulation, AmBisome®, still represents the best therapeutic option for cutaneous and visceral leishmaniasis. However, its clinical efficacy depends on the patient's immunological status, the clinical manifestation and the endemic region. Moreover, the need for parenteral administration, its side effects and high cost significantly limit its use in developing countries. This review reports the progress achieved thus far toward the understanding of the mechanism responsible for the reduced toxicity of liposomal AmB formulations and the factors that influence their efficacy against leishmaniasis. It also presents the recent advances in the development of more effective liposomal AmB formulations, including topical and oral liposome formulations. The critical role of the AmB aggregation state and release rate in the reduction of drug toxicity and in the drug efficacy by non-invasive routes is emphasized. This paper is expected to guide future research and development of innovative liposomal formulations of AmB. [ABSTRACT FROM AUTHOR]