Docetaxel-loaded liposomes were prepared by emulsion-solvent evaporation method, then coated with chitosan at room temperature and lyophilized. This system was designed in order to improve solubility and stability of docetaxel in the GI tract for oral drug delivery. The solubilizing effect of some frequently used solubilizers and/or liposome was determined. Among the results docetaxel-loaded liposomes prepared with 0.5% TPGS as a solubilizer showed 100-fold higher solubility than docetaxel. In a stability test, mean particle size of different liposome formulations was measured by a particle size analyzer in simulated gastric fluid (SGF) and in simulated intestinal fluid (SIF). The particle size of uncoated liposomes was significantly increased compared with that of chitosan-coated liposomes in SGF, however, there was no significant difference between coated and uncoated liposome in SIF. It is evident that chitosan-coated liposomes were more stable in GI conditions. The release characteristics of docetaxel-loaded liposomes were also investigated in three buffer solutions (pH 1.2, 4.0, 6.8). Docetaxel release did not occur in pH 1.2 for 4 hrs. However, in pH 4.0 and 6.8 conditions, docetaxel was gradually released over 24 hrs as a sustained release. It seems that aggregation and precipitation of particles by electrostatic interaction might protect docetaxel from being released. In Conclusion, the results from this study show that the chitosan-coated liposomes may be useful in enhancing solubility and GI stability of docetaxel.