In the present work, paromomycin-loaded albumin microspheres (PM-MS) have been formulated for passive targeting of paromomycin (PM) to macrophages, for the treatment of visceral leishmaniasis (VL). PM-MS were prepared by spray-drying method with a mean particle size of ≈ 3 µm. Thermal and chemical cross-linking methods were used for controlling drug release from the prepared microspheres (MS). PM-MS were then tested for efficacy and stability studies. In efficacy study, in vitro promastigote assay was carried out to assess the susceptibility of promastigote to PM in the concentration range of 5.0–150 µg/ml; cytotoxicity assay was performed to determine possible toxicity of PM for the host cells (peritoneal macrophages) and intracellular amastigote assay was carried out to determine the efficacy of free PM (PM solution) and encapsulated PM (PM-MS). Results obtained indicated a significant increase in efficacy of PM-MS in comparison to PM solution at equivalent concentration. Subsequently, stability studies of prepared formulation was carried out at various temperature and humidity conditions, these studies provided stability of formulation at all tested conditions including accelerated conditions. Thus, it can be concluded that present work provides an optimized formulation with stability and enhanced efficacy. Copyright © 2012 John Wiley & Sons, Ltd.