The ever-evolving nature of influenza virus strains continues to be a cause for concern in preventing the next influenza pandemic or epidemic and combating resistance. In this work, the mechanism of action of a novel anti-influenza liposome formulation is explored. Since the liposome is designed to bind to influenza hemagglutinin receptor, interaction of the virus and liposome was investigated by size analysis and quantified by surface plasmon resonance, which demonstrated that binding between the two can be characterized by a dissociation constant (K_d) in the nanomolar range. Sialylated liposomes were found to inhibit the infection of 10³ plaque forming units (PFU) on MDCK and human airway epithelial cells by 70-90% at nanomolar concentrations when pre-mixed with virus, but were less effective when given prophylactically or post-infection. Thus, binding of sialylated liposome to virus seems to be a prerequisite for preventing infection, and consequently, for disrupting the kinetics of viral replication.