Although liposomes have proven useful for the delivery of drugs and gene therapy vectors, their potencies are often compromised by poor unloading following uptake into their target cells. We have consequently explored the properties of a novel 29-residue amphipathic peptide that was designed by arrangement of hydrophobic and hydrophilic residues to disrupt liposomes at lower peptide concentrations than previously tested peptides. The peptide was indeed found to promote pH-dependent liposome unloading with improved efficiency. A peptide of the same sequence, but half the length, however, promoted pH-dependent permeabilization only at much higher concentrations. Further characterization of the longer peptide revealed that release of liposome contents (i) occurred at a pH of approximately 6, (ii) became less efficient as the size of the encapsulated cargo increased, and (iii) was moderately suppressed in cholesterol-containing liposomes. Use of this peptide to enhance the cytotoxicity of cytosine arabinoside encapsulated in folate-targeted liposomes demonstrated an increase in drug potency of approximately 30-fold. Gene expression by a serum-stable folate-targeted liposomal vector was also measurably enhanced by inclusion of the peptide. We conclude that intracellular unloading of liposomal contents can be significantly improved by co-encapsulation of an optimally designed, pH-sensitive peptide.