In the present study, green tea extract was encapsulated in liposomes prepared by Mozafari method (without any organic solvents) and characterized for its physicochemical properties e.g. encapsulation efficiency, particle size and z- potential. The obtained results for encapsulation efficiency, particles size and z- potential were 51.34, 419 nm and -57 mV, respectively. Total polyphenol content of green tea was obtained 164.2 mg gallic acid /g extract. Free radical scavenging activities of free and liposomal extract, with using DPPH method were measured 90.6% and 93.37% respectively. Antioxidant activity of ethanolic extract of green tea in free and liposomal form were measured at concentration of 200, 600 and 1000 mg/L on the oxidative stability of canola oil during 60°C temperature for 0, 4, 8, 12, 16, 20, 24, 28 and 32 days. The results compared with synthetic antioxidant butylated hydroxytoluene at 200 mg/L. To evaluate antioxidant activity on canola oil stability, peroxide value, Thiobarbitoric acid, anisidine value, TOTOX and rancimat test measured. Results showed that liposomal green tea extract acted more effective than free extracts. Also, 600 mg/L concentration of green tea extract showed significant antioxidant activity in compare to others. The increasing storage time and different concentrations of ethanolic green tea extracts had significant effects on canola oil stability (P≤0.05). The obtained results showed green tea extract could act as an effective antioxidant. Green tea extract in free and liposomal form at 600 mg/L concentration resulted stronger function than butylated hydroxytoluene synthetic antioxidant.