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The purpose of the study was to develop a liposomal drug delivery system for morin, a dietary polyphenol, in order to target the synovial macrophages and investigate the remission of disease severity in the adjuvant-induced arthritic (AIA) rats. To do so, mannose decorated liposomal morin (ML-Morin) was prepared using the thin film hydration method and the physicochemical properties were characterized. The particle size and zeta potential of liposomal morin (L-Morin) was found to be 127.9 nm ± 2.6 and −24.5 mV ± 0.76, whereas ML-Morin showed an increased value of 132.5 nm ± 5.2 and −54.8 mV ± 0.67 respectively. Further, the drug entrapment efficiency (% EE) of ML-Morin was found 86.7 ± 3.8%. To understand the efficacy of L-Morin, ML-Morin over free-Morin; cellular uptake, production and expression of pro-inflammatory mediators, osteoclastogenic factors, and transcription factors were evaluated in primarily isolated synovial and spleen macrophages. Interestingly, confocal microscopic images showed an increased uptake of ML-Morin in the synovial and spleen macrophages than L-morin. In addition, ML-Morin significantly suppressed the production and mRNA expression of pro-inflammatory cytokines (TNF-α, IL-1β, IL-6, and IL-17), angiogenic factors (VEGF), an inflammatory enzyme (iNOS), and transcription factor (NF-κB-p65). Furthermore, the protein expression of TNF-α, IL-1β, IL-6, IL-17, RANKL, STAT-3, and p-STAT-3 was found to decrease with increased osteoprotegerin (OPG) expression in the ML-Morin targeted macrophages. Thus, our findings endorsed that, ML-Morin preferential internalization into the macrophages of arthritic rats effectively inhibited the inflammatory immune response and osteoclastogenesis better than the dexamethasone palmitate encapsulated mannosylated liposomes (ML-DP), a reference drug as evidenced by clinical and histological analysis.