The present invention describes a method for targeted and specific delivery of beneficial compounds, including hair dyes, melanin, proteins, and nucleic acids for gene therapy, to hair follicle cells using liposomes encapsulating the beneficial compound. Particularly preferred methods describe delivery of hair dyes, melanin or tyrosinase to the hair follicle for the purpose of improving hair color or condition, the delivery of compounds which prevent alopecia or stimulate hair growth, either by encapsulating a compound in liposomes, or by encapsulating a nucleic acid capable of expressing a protein in liposomes. Also described are liposome compositions for practicing the methods.