Sonication is a simple method for reducing the size of liposomes. We report the size distributions of liposomes as a function of sonication time using three different techniques. Liposomes, mildly sonicated for just 30 sec, had bimodal distributions when surface-weighted with modes at about 140 and 750 nm. With extended sonication, the size distribution remains bimodal but the average diameter of each population decreases and the smaller population becomes more numerous. Independent measurements of liposome size using Dynamic Light Scattering (DLS), transmission electron microscopy (TEM), and the nystatin/ergosterol fusion assay all gave consistent results. The bimodal distribution (even when number-weighted) differs from the Weibull distribution commonly observed for liposomes sonicated at high powers over long periods of time and suggests that a different mechanism may be involved in mild sonication. The observations are consistent with the following mechanism for decreasing liposome size. During ultrasonic irradiation, cavitation, caused by oscillating microbubbles, produces shear fields. Large liposomes that enter these fields form long tube-like appendages that can pinch-off into smaller liposomes. This proposed mechanism is consistent with colloidal theory and the observed behavior of liposomes in shear fields.