Intracellular location of leishmania parasite in macrophages protects them from both hosts defence system as well as from antibiotics like paromomycin (PM) acting against them, thus there is a need of a formulation targeting intracellular parasites. Considering this, PM-loaded albumin microspheres (PM-MS) were prepared to target PM to macrophages where leishmania parasites resides and evaluated for their safety profile. A new bioanalytical method for quantitative determination of PM in rat plasma was developed by pre-column derivatization with 9-fluorenylmethyl chloroformate. The developed bioanalytical method was validated and applied for pharmacokinetic studies of PM administered by intramuscular and intravenous routes as well as for developed PM-MS which were administered by intravenous route. Comparative acute and subacute toxicity studies were also carried out for these formulations. The developed method was found to be very sensitive with a quantification limit of 40 ng/ml. Pharmacokinetic studies demonstrated nearly 80% reduction in Cmax of PM when administered as PM-MS, compared to other formulations at equivalent dose. Toxicity studies indicated increased level of blood urea and blood urea nitrogen in PM intramuscular injection at 90 mg/kg dose, whereas at the same dose level PM-MS showed no symptoms of toxicity. Results obtained suggest that developed PM-MS formulation is a promising alternative to the presently marketed PM intramuscular injection for the treatment of visceral leishmaniasis. Copyright © 2012 John Wiley & Sons, Ltd.