AbstractIndocyanine green (ICG) is the only FDA‐approved near‐infrared dye and it is currently used clinically for diagnostic applications. However, there is significant interest in using ICG for triggered drug delivery applications and heat ablation therapy. Unfortunately, free ICG has a short half‐life in vivo and is rapidly cleared from circulation. Liposomes have been frequently used to improve ICG's stability and overall time of effectiveness in vivo, but they have limited stability due to the susceptibility of phospholipids to hydrolysis and oxidation. In this study, nonphospholipid liposomes were used to encapsulate ICG, and the resulting liposomes were characterized for size, encapsulation efficiency, stability, and photothermal response. Using the thin‐film hydration method, an ICG encapsulation efficiency of 54% was achieved, and the liposomes were stable for up to 12 weeks, with detectable levels of encapsulated ICG up to week 4. Additionally, ICG‐loaded liposomes were capable of rapidly producing a significant photothermal response upon exposure to near‐infrared light, and this photothermal response was able to induce changes in the mechanical properties of thermally responsive hydrogels. © 2018 Wiley Periodicals, Inc. J Biomed Mater Res Part B: Appl Biomater 107B: 1384–1392, 2019.