The incorporation of polymer-lipid conjugates, initially using PEG and subsequently other selected flexible, hydrophilic polymers, into lipid bilayers gives rise to sterically stabilized liposomes that exhibit reduced blood clearance and concomitant changes in tissue distribution largely because of reduced, but not eliminated, phagocytic uptake. Changes in tissue distribution includes 'passive' targeting localization into sites of tumors, infection, inflammation characterized by presence of a 'leaky' vasculature which represent useful applications for drug delivery. The polymer forms a surface coating which has been characterized by physical measurements and it appears to function through steric inhibition of the protein binding and cellular interactions leading to phagocytic uptake. The current understanding of the physical and biological properties are reviewed. Ongoing work in the field involves interests to increase complexity such as addition of (1) selective targeting ligands by chemical conjugation to the exterior surface of the polymer coating, (2) capabilities for intracellular release of encapsulated agents into the cytoplasm, and (3) both simultaneously.