The using of plant extract in dairy field is a recent trend to achieve health benefits. Sage (Salvia officinalis L) is a medicinal plant contained a large number of bioactive and biological compounds. The phenolic compounds, chemical composition and physical properties of Sage phenolic extract (SPE) loaded in liposomal system were firstly investigated, and then it was used to fortify yoghurt (5, 10, 15 and 20 %) to produce functional dairy product. Obtained data revealed that the encapsulation efficiency of SPE in liposomes was 83.7%, the particle size ranged between 168.30 to 273 nm and Zeta potential was +35.4 mV. SPE exhibited an inhibition activity against all tested pathogenic bacteria and the antibacterial activity of SPE was increased significantly after encapsulation in liposomes. The highest antibacterial activity was noted against S. aurous and B. cereus. On another vision; protein, total solids and ash contents of fresh yoghurt increased with increasing the concentration of SPE liposomes but decreased after 15 days of storage. The pH values and diacetyl contents of liposome supplemented yoghurt decreased compared to control throughout storage. The acetaldehyde content of control significantly decreased during cold storage while it increased with increasing concentration of SPE liposome in yoghurt. The viscosity of fresh yoghurt increased with the increase of added liposome but decreased after 15 days of storage. Supplementation of yoghurt samples with SPE liposomes significantly enhanced the viability of L. rhaminosus along the storage period. The high selectivity index values of SPE suggest their safety and cytotoxic selectivity effect on cancer cell.