The myelosuppressive activity of doxorubicin encapsulated in liposomes of differing lipid composition and size was quantified in mice by measurement of changes in spleen weight, peripheral white blood cells (WBC), and bone marrow nucleated cells. Following i.v. administration of free doxorubicin at a dose of 20 mg/kg, a 90% reduction in marrow cellularity was observed on day 3. The marrow nucleated cell count was similar to control values by day 7. Administration of an equivalent dose of doxorubicin that was encapsulated in large (diameter, approximately 1.0 microns) egg phosphatidylcholine/cholesterol (EPC/Chol)(molar ratio, 55:45) liposomes induced an 80% reduction in bone marrow cellularity that lasted for periods of greater than 7 days. Similar results were obtained following administration of large (1.0 microns) liposomal doxorubicin systems formulated with distearoylphosphatidylcholine/cholesterol (DSPC/Chol) (molar ratio 55:45). In contrast, liposomal doxorubicin prepared using small (diameter, approximately 0.1 micron) DSPC/Chol liposomes induced only a 40% reduction (day 3) in bone marrow cellularity, which returned to control values by day 7. Other indicators of doxorubicin-mediated myelosuppressive activity (spleen weight loss and peripheral leukopenia) correlated well with changes observed in marrow cellularity. An exception to this, however, was observed in animals treated with small (0.1 -micron) DSPC/Chol Liposomal doxorubicin, which displayed peripheral leukopenia for periods of greater than 14 days. This extended leukopenia was not observed following administration of small (0.1 -micron) EPC/Chol liposomal doxorubicin. Marrow-associated liposomal lipid and doxorubicin were quantified to determine if the extent of doxorubicin-mediated myeloid toxicity could be correlated to changes in biodistribution of the entrapped drug. It was demonstrated that 10-20 times more doxorubicin is delivered to the bone marrow when the drug is given encapsulated in large liposomes than when it is associated with small liposomes. These data are useful in defining characteristics of liposomal preparations that modulate the myelosuppressive behaviour of entrapped antineoplastic agents.