Tea tree oil (TTO) exhibits excellent broad-spectrum antimicrobial activity. In order to preserve it from the degradation in the presence of oxygen, light and temperature, TTO was encapsulated in liposomes (LTTOs) using the thinmembrane hydration and sonication method, and characterised by Zetasizer for size and size distribution, transmission electron microscope for morphology, zetapotential for surface charge, entrapment efficiency and TTO release from the nanoparticles. The antimicrobial activities of phosphate-buffered saline solution containing TTO, unloaded liposomes and LTTOs suspension were determined by twofold serial broth dilution technique. The size of LTTOs was 75 nm and the encapsulation efficiency of 96.08% was obtained. LTTOs exhibited slow release of TTO and superior broad-spectrum antimicrobial effects compared with free TTO. Liposomes not only effectively encapsulated TTO to form a stable liposome suspension, but also enhanced inhibition and bactericidal effect on the TTOtolerant strain. The liposomal systems carrying TTO may be a potential alternative for effective antimicrobial agents.