Abstract: Metastable liposomal formulations for hydrophobic drug delivery to a tissue or tissue lumen such the bladder have been developed. These are at least one micron in diameter and formed of one or more lipids having entrapped in the lipid a hydrophobic therapeutic, prophylactic or diagnostic agent. The greater stability of these liposomes, as well as the enhanced transfer of entrapped agent into the adjacent tissue, provides for better delivery, especially of hydrophobic agents such as tacrolimus which does not penetrate tissue well. The metastable liposomal formulations can be administered locally, preferably by instillation, or topically, for example, by spraying or painting, to a tissue or tissue lumen such as the bladder in need of treatment.