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Drug-fortified cationic liposomes of 6-methoxy-2-naphthylacetic acid (6-MNA) were prepared and characterized by various techniques. The residence time of drug-fortified liposomes in joint cavity was evaluated by intra-articular (IA) administration of the radio-labeled (99mTc) liposomal formulation in the inflamed joints in rats. The cationic liposomal formulation composed of 6-MNA (3) as an active agent, its double salt (4) with the lipid 1,2-distearoyl-sn-glycero-3-phosphoethanolamine (DSPE), and pharmaceutically acceptable excipients such as hydrogenated soyabean phospatidylcholine (HSPC) and 1,2-dioleyloxy-3-trimethylammoniumpropane chloride (DOTAP) were developed using thin film hydration technique. The cryo-TEM analysis confirmed that the prepared optimized liposomal formulation (DFL-2) was a mixture of small unilamellar vesicles (SUVs), large unilamellar vesicles (LUVs) and multilamellar vesicles (MLVs). In addition, the TEM analysis confirmed that the prepared liposomes were of spherical in shape having liposome size in the range of 500–900 nm and zeta potential of about +30 mV. The developed cationic liposomes exhibited sustained release profile of payload of 6-MNA for over >12 h and about five times higher retention in the inflamed animal joints after 24 h (by scintigraphy of the joints) as compared to the plain 6-MNA solution when administered by IA route. The anti-inflammatory activity of prepared liposomal composition is evaluated by Freund's adjuvant induced arthritic model in rats. The liposomal formulation was well tolerated by all animals indicating good biocompatibility. Further, the cationic liposomal formulation treated group showed decreased erythrocyte sedimentation rate (ESR), and C-reactive protein (CRP) level in comparison to the control and the standard groups in the in vivo study. The improved efficacy of the drug-fortified liposomal formulation was due to the coupled effect of longer retention and sustained release of the active drug 6-MNA in the joints. From the obtained results it could be concluded that the combined effect of the cationic charge on the drug-fortified liposomes and the inherent affinity of the active agent towards the synovial joint tissues, coupled with slow release of the active drug due to double salt approach at the site of administration could potentially decrease the frequency of IA drug administration. Hence such a formulation could prove to be a therapeutic boon for the management of late stage arthritis.