PURPOSE. The ocular toxicity of various compounds is typically determined by the Draize eye test, which has been criticized in the past for its lack of reproducibility and the cruelty associated with harsh testing conditions for animals. In this study, a liposome-based assay was developed for estimating ocular toxicity of surfactants. METHODS. The release of calcein dye from liposomes induced by interactions with surfactants was studied and correlated to Draize eye scores. First, the liposome assay was conducted for various surfactants at identical concentrations and correlated to the Draize scores. Next, mechanistic and geometric considerations were used to determine the appropriate surfactant concentration that should be used in the liposome assay. RESULTS. Correlations between the percentage of dye released and the Draize scores were drastically improved after surfactant concentrations were chosen based on CMC/200, where CMC is the critical micelle concentration of the surfactants. With this choice of surfactant concentration, excellent correlations were obtained with Draize scores from three separate sources and two different ocular surfactant loadings (Pearson = 0.99, 0.82, 0.78, and 0.74; Spearman = 0.94, 0.79, 0.79, and 0.85). Subsequently, the ocular toxicities of six nonionic surfactants, Brij 700, -58, -56, -78, -97, and -98 were shown to be minimal based on the proposed correlations. CONCLUSIONS. The modified liposome assay developed in this study could be used in conjunction with other in vitro assays to obtain initial estimates for ocular toxicities and thus minimize the need for the Draize test. (Invest Ophthalmol Vis Sci. 2009; 50: 2727-2735) DOI: 10.1167/iovs.08-2980