The aims of the present study were to formulate stable onion phases of the biodegradable surfactant PEG-8 Distearate (PEG8DS) and evaluate application of the onion phases in encapsulating sumatriptan succinate, a BCS class III potent antimigraine drug. Drug loaded and placebo onion phases were prepared by shearing lyotropic lamellar phases of the surfactant. Effect of drug/surfactant ratio, shear rate and shear time on particle size, and encapsulation efficiency were studied. The onion phases were characterized by polarized microscopy, small angle neutron scattering (SANS), NMR, rheology, and FTIR. Formation of onion phases of PEG8DS was confirmed by the presence of maltese crosses under a crosspolarized microscope and further by SANS studies. The onion phases revealed an increase of inter-bilayer spacing by 7 A after drug incorporation. NMR studies revealed location of drug in the aqueous phases of the multilamellar vesicles (MLVs). FTIR study revealed no interaction between drug and surfactant. Drug loaded onion phases exhibited high encapsulation efficiency ( approximately 90%) and rapid in vitro drug release (>90% in 10 min). Onion phases stored at 5 degrees C +/- 3 degrees C revealed no significant drug leakage at the end of 3 months suggesting adequate stability. Sumatriptan succinate loaded stable onion phases of PEG8DS with high entrapment efficiency and rapid drug release suggests potential application of the onion phases in drug delivery.