Cancer mortality is progression-dependent thus its treatment relies on effective therapy and monitoring of responses. Nanoparticles have long been used to improve the therapeutic index of drugs by facilitating their transit to the target site at higher concentrations than free drugs, whilst protecting healthy tissues from an often potent and cytotoxic payload. Through the EPR (enhanced permeability and retention) effect, injected, PEGylated nanoparticles preferentially accumulate in tumour tissue deeming them eminently suitable for cancer intervention for delivery of both therapeutic and contrast agents The development of theranostic liposomal systems comprising both imaging and therapeutic capabilities exploits the facets of liposomes, and forms an elegant strategy to address major problems which hinder effective cancer therapy. Liposomes can be tailored to be thermosensitive in a low hyperthermic range of ~42oC, above physiological temperature but below that which can induce tissue damage. This allows the use of heating as an external triggering modality to induce targeted drug release. Throughout the course of this work, the photoacoustic contrast agent ICG was successfully incorporated into PEGylated doxorubicin-encapsulating liposomes, marrying two FDA approved entities. The project commenced with the development of the basic liposomal-DOX. Differing lipid compositions of varying fluidities were tested against those which have been previously established. These compositions carried a range of phase transition temperatures, above which the liposomes release the encapsulated DOX. This study concluded with the generation of a library of liposomes with differing release kinetics at 42oC in simulated physiological conditions.VIThe second section of the project investigated the methodology behind the incorporation of ICG into the liposomal bilayers. The lipid composition used for the study was based on the DOXIL® formulation, due to its robust structure and establishment in the field of cancer therapy. The protocols used varied on the basis of chronology in regards to the liposome preparation protocol. The film insertion method incorporated the ICG in initial lipid film generation. The freeze fracture protocol introduced the ICG during lipid film hydration. The post insertion protocol introduced ICG in the final stages of DOX loading. The downsizing protocol was also varied between extrusion and sonication. Through varying of the protocols and downsizing methodology, it was possible to incorporate differing ICG concentrations and attain differing levels of structural stability. The most successful liposome was then tested for its imaging potential in vivo through a photoacoustic imaging modality namely multispectral optoacoustic tomography. This validated accumulation of the liposomes at the tumour site along with co-localisation of both drug and dye. The project culminated in the combination of the two studies, producing a thermosensitive theranostic ICG labelled liposomal doxorubicin system. The system showed improved blood stability than the current clinical systems, and demonstrated imaging potential through IVIS based fluorescence imaging. Through exploitation of the photothermal effects of ICG within a thermosensitive lipid vesicle, it was also possible to induce drug release through irradiation with a non-thermal near-infrared laser. This shows promise for future therapy, allowing simultaneous imaging, optimum release induction and monitoring response to therapy, in a cheap, effective and time-efficient manner.