The dose of anthracyclines used during induction has been identified as a significant prognostic factor in acute leukemias. Liposomal encapsulation of anthracyclines has been proposed as a way of decreasing toxicity and probably increasing efficacy of these agents, therefore allowing the exploration of high-dose anthracycline therapy in acute leukemias. We conducted a phase I study of liposomal daunorubicin (Daunoxome; DNX) in patients with refractory or relapsed acute leukemias. Patients received three daily doses of DNX at 75, 100, 150 or 200 mg/m2 on each cycle, to a total dose of 225, 300, 450, and 600 mg/m2, respectively. At least three patients were included at each dose level before escalating to the next level, and patients could receive more than one course at the next dose level. Twenty-four patients were included and 23 are evaluable. Fifteen patients received one course, seven received two courses, and one received three courses of DNX. Seventeen patients had previously received anthracyclines. The dose-limiting toxicity was mucositis which occurred (grade 3-4) in 3 of 5 patients treated at 200 mg/m2, 2 of 9 treated at 150 mg/m2 and 1 of 6 at 100 mg/m2. Other non-hematologic toxicity was mild and infrequent. There was no change in post-LVEF among 9 patients with available data and no significant cardiac events were documented. Two patients had a complete response: one patient with chronic myeloid leukemia in refractory blast phase went back to chronic phase, and one patient with second relapse acute promyelocytic leukemia achieved a third complete remission. We conclude that the maximally tolerated dose of DNX in this schedule is 150 mg/m2 and has significant anti-leukemia activity.