One approach to effective cancer chemotherapy is to maximize the exposure of tumor cells to cytotoxic drugs while minimizing the exposure of sensitive normal cells to such agents. This implies the need for control of the pharmacodynamics of anti-tumor drugs in terms of blood clearance kinetics, disposition in tissues, passage across membrane barriers, and interaction with metabolic pathways. A promising approach to pharmacodynamic control is the microencapsulation of drugs within liposomes. The clearance kinetics and tissue disposition of the drug is then dictated by the pharmacokinetic behavior of the liposomal carrier. The blood clearance rates and tissue uptake of liposomes themselves depend upon physical characteristics such as particle size and surface charge. It is also possible to promote specific interaction between cells and liposomes in vitro by preparing liposomes containing biological macromolecules such as lectin receptors. The potentialities of microencapsulation as an adjunct to chemotherapy are discussed.