Oral delivery of protein or polypeptide drugs remains a challenge due to gastric and enzymatic degradation as well as poor permeation across the intestinal epithelia. In this study, liposomes containing bile salts were developed as a new oral insulin delivery system. The primary goal was to investigate the effect of cholate type, particle size and dosage of the liposomes on the hypoglycemic activity and oral bioavailability. Liposomes containing sodium glycocholate (SGC), sodium taurocholate (STC) or sodium deoxycholate (SDC) were prepared by a reversed-phase evaporation method. After oral administration, all liposomes elicited a certain degree of hypoglycemic effect in parallel with an increase of blood insulin level. The highest oral bioavailability of approximately 8.5% and 11.0% could be observed with subcutaneous insulin as reference for SGC-liposomes in non-diabetic and diabetic rats, respectively. Insulin-loaded liposomes showed slower and sustained action over a period of over 20 h with peak time around 8-12 h. SGC-liposomes showed higher oral bioavailability than liposomes containing STC or SDC and conventional liposomes. The hypoglycemic effect was size-dependent with the highest at 150 nm or 400 nm, and was proportionally correlated to the administered dose. The results supported the hypothesis of insulin absorption as intact liposomes.