Contrast-enhanced magnetic resonance imaging (CE-MRI) is a dynamic technique for imaging vasculature. However, the currently used gadolinium (Gd) chelates, such as Gd-DTPA, restrict the time window for image acquisition due to their rapid elimination from blood and their rapid diffusion into the extravascular space, which prevents their use in steady-state imaging, particularly for MR angiography (MRA). The goal of this study was to prepare long-circulating polyethylene glycol-bearing ((PEG)ylated) liposomes encapsulating Gd chelate, and characterize and demonstrate their utility for MRA. The liposomes were prepared by hydrating a mixture of lipids with gadodiamide (Omniscan). The liposomes were sized down to around 100 nm by extruder and exhaustively dialysed to remove the unencapsulated gadodiamide. The Gd liposomes exhibited a significant sustained (>4 hr) contrast enhancement of the vasculature with improved spatial details in a rat model with little leakage relative to Gd-DTPA controls as shown by MRI. We suggest that such long-circulating liposomal formulations allow for high spatial resolution imaging without the confounding effects of clearance and extravascular diffusion of the agent complicating the data and image analysis.