Liposomes prepared from naturally occurring biodegradable and nontoxic lipids are good candidates for local delivery of therapeutic agents. Treatment of arthritis by intra-articular administration of anti-inflammatory drugs encapsulated in liposomes prolongs the residence time of the drug in the joint. We have previously shown that intra-articular injection of human lactoferrin (hLf), a glycoprotein that possesses anti-inflammatory and antimicrobial activities, into mice with collagen-induced arthritis reduces inflammation. We have now investigated the possibility of using liposome-entrapped hLf as a delivery system to prolong hLf retention at sites of local inflammation such as the rheumatoid joint. Entrapment of hLf in negatively charged liposomes enhanced its accumulation in cultured human synovial fibroblasts from rheumatoid arthritis (RA) patients, compared with positively charged formulations or free protein. However, in the presence of synovial fluid, positively charged liposomes with entrapped hLf were more stable than the negatively charged formulations. In vivo experiments in mice with collagen-induced arthritis showed that the positive liposomes were more efficient in prolonging the residence time of hLf in the inflamed joint as compared with other liposomes. Thus, the amount of hLf retained in the joint after 2 hr was 60% of the injected dose in the case of positive liposomes and only 16% for negative pH-sensitive liposomes. The results suggest that entrapment of hLf in positively charged liposomes may modify its pharmacodynamic profile and be of therapeutic benefit in the treatment of RA and other local inflammatory conditions.