The eugenol derivative, ethyl 4-(2-methoxy-4-(oxiran-2-ylmethyl)phenoxy)butanoate 1, with promising insecticidal capability was encapsulated in liposomal formulations of egg-phosphatidylcholine/cholesterol (Egg-PC:Ch) 70:30 and of 100% dioleoylphosphatidylglycerol (DOPG). Compound-loaded Egg-PC:Ch liposomes exhibit small hydrodynamic diameters (below 100 nm), high encapsulation efficiency (88.8% ± 2.7%), higher stability and a more efficient compound release, being chosen for assays in Sf9 insect cells. Compound 1 elicited a loss of cell viability up to 80% after 72h of incubation. Relevantly, encapsulation maintained the toxicity of compound 1 towards insect cells, while it lowered toxicity towards human cells, thus showing the selectivity of the system. Structure based inverted virtual screening was used to predict the most likely targets and molecular dynamics simulations and free energy calculations were used to demonstrate that this molecule can form a stable complex with insect odorant binding proteins and/or acetylcholinesterase.