The objective of the study was to optimize the formulation parameters of cytarabine liposomes by using artificial neural networks (ANN) and multiple regression analysis using 3(3) factorial design (FD). As model formulations, 27 formulations were prepared. The formulation variables, drug (cytarabine)/lipid (phosphatidyl choline [PC] and cholesterol [Chol]) molar ratio (X1), PC/Chol in percentage ratio of total lipids (X2), and the volume of hydration medium (X3) were selected as the independent variables; and the percentage drug entrapment (PDE) was selected as the dependent variable. A set of causal factors was used as tutorial data for ANN and fed into a computer. The optimization was performed by minimizing the generalized distance between the predicted values of each response and the optimized one that was obtained individually. In case of 3(3) factorial design, a second-order full-model polynomial equation and a reduced model were established by subjecting the transformed values of independent variables to multiple regression analysis, and contour plots were drawn using the equation. The optimization methods developed by both ANN and FD were validated by preparing another 5 liposomal formulations. The predetermined PDE and the experimental data were compared with predicted data by paired t test, no statistically significant difference was observed. ANN showed less error compared with multiple regression analysis. These findings demonstrate that ANN provides more accurate prediction and is quite useful in the optimization of pharmaceutical formulations when compared with the multiple regression analysis method.