This study tested the therapeutic efficacy of doxorubicin hydrochloride in two formulations: free in saline suspension and encapsulated in polyethylene glycol-coated, long-circulating liposomes. The drug formulations at a dose level of 3 mg doxorubicin per kg body weight were injected intravenously to treat the human pancreatic carcinoma AsPC-1, implanted s.c. into nude Swiss mice. Liposome-encapsulated doxorubicin was significantly more effective in inhibiting tumour growth and in effecting cures, and had only minor systemic toxic side-effects, indicated by a transient weight loss. Confocal laser scanning microscopy was used to determine the tumour uptake and the clearance of doxorubicin in the free and in the liposomal forms. The liposome-encapsulated doxorubicin entered the tumour in greater quantity, and remained in the tumour longer, than the free drug. The liposome formulation produced a sixfold or greater increase in doxorubicin at the disease site. It is probable that increased penetration into the tumour, and long presence with slow drug release from liposomes in the tumour, account for the enhanced therapeutic effect when the drug was encapsulated in polyethylene glycol-coated liposomes.