The prognosis of pancreatic adenocarcinoma is poor and current treatment ineffective. A novel treatment strategy is described here using a mouse model system for pancreatic cancer. Cells that have been genetically modified to express the cytochrome P450 2B1 enzyme are encapsulated in cellulose sulphate and implanted into pre-established tumours derived from human pancreatic cells. Cytochrome P450 2B1 converts the chemotherapeutic agent ifosfamide to toxic metabolites. Administration of ifosfamide to tumour-bearing mice that were recipients of implanted encapsulated cells results in partial or even complete tumour ablation. These results suggest that in situ chemotherapy with genetically modified cells in an immunoprotected environment may prove useful for application in man.