The role of transferrin receptor-mediated endocytosis in promoting murine bladder tumor cell (MBT2) uptake of liposomes and the antiproliferative effect of liposome-entrapped alpha-interferon (alpha-IFN) against MBT2 were investigated. Liposomes (0.11 microm) were prepared using phosphatidylcholine and phosphatidylserine in a molar ratio of 7:3, with or without surface conjugation of transferrin-polylysine (TFPL). The uptake of plain liposomes (without TFPL) by MBT2 was less than 5% after incubation for 48 h. In contrast, cell uptake of TFPL-liposomes was markedly enhanced by TFPL in a dose-dependent manner and reached plateau levels in 24 h. This increase was partially blocked by the addition of free transferrin, suggesting that the uptake process involves transferrin receptor-mediated endocytosis. The antiproliferative activity of alpha-IFN (100-200 U/well), delivered via plain liposomes, measured against blank liposome control, was in the range of 25-35%, which was similar to that of free alpha-IFN. In comparison, inhibition of cell proliferation by same concentrations of alpha-IFN delivered by TFPL-liposomes was 90-100%. These results show a strong correlation between antiproliferative activity and the uptake of liposomes by the tumor cells, indicating that TFPL-liposomes promote intracellular delivery of alpha-IFN and enhance the effect of alpha-IFN against MBT2 cell growth. The potential cytotoxicity of drug-free liposomes was also investigated. Liposomes containing various concentrations of TFPL showed significant dose- and time-dependent antiproliferative activity against MBT2. This effect maybe attributed to lipidosis and/or the destruction of intracellular cycle of iron transport.