The present paper is aimed at development of functionalized risperidone liposomes for brain targeting through nasal route for effective therapeutic management of schizophrenia. The risperidone liposomes were prepared by thin film hydration method. Various parameters such as lipid ratio and lipid to drug ratio were optimized by using Design-Expert® Software to obtain high entrapment with minimum vesicle size. The surface of the optimized liposomes was modified by coating stearylamine and MPEG-DSPE for enhanced penetration to the brain. The formulations were evaluated for vesicle size, zeta potential, and entrapment efficiency. The morphology was studied by Transmission Electron Microscopy (TEM). In vivo efficacy was assessed by performing pharmacokinetic study in Wistar albino rats following intranasal administration of the formulations in comparison to intravenous bolus administration of pure drug. The mean vesicle size of optimized liposomes ranged from 90 to 100 nm with low polydispersity index (< 0.5). The entrapment efficiency of optimized liposomes was between 50 and 60%, functionalized liposomes showed maximum entrapment. The TEM images showed predominantly spherical vesicles with smooth bilayered surface. All formulations showed prolonged diffusion controlled drug release. The in vivo results showed that liposomal formulations provided enhanced brain exposure. Among the formulations studied, PEGylated liposomes (LP-16) had shown greater uptake of risperidone into the brain than plasma. High brain targeting efficiency index for LP-16 indicating preferential transport of the drug to brain. The study demonstrated successful formulation of surface modified risperidone liposomes for nasal delivery with brain targeting potential.