Abstract: A method for producing multilamellar coalescence vesicles (MLCVs) containing increased amounts of biologically active compound is disclosed. The method involves hydrating at least one powdered lipid in an aqueous buffer at a temperature above the phase transition temperature of the highest melting lipid to form multilamellar vesicles, reducing the size of the multilamellar vesicles to about 20-400 nm to produce small unilamellar vesicles (SUVs) or large unilamellar vesicles (LUVs) or a mixture thereof; and incubating the SUVs, LUVs or mixture thereof with a biologically active compound in an aqueous solution under sufficient conditions to form MLCVs containing the biologically active compound without the use of an organic solvent, a freeze-thawing step or a dehydration step.