The pharmacokinetics of liposome-encapsulated drugs are controlled by the interplay of two variables: the rate of plasma clearance of the liposome carrier, and the stability of the liposome-drug association in the blood stream. The pharmacokinetic properties of the liposomal drug, the vesicle size of the liposome carrier and the vascular permeability of individual tissues will determine the extravasation and biodistribution profile. The pharmacokinetics of polyethylene-glycol-(PEG)-liposomal doxorubicin are characterized by an extremely long circulating half-life, slow plasma clearance and reduced volume of distribution compared to free doxorubicin. These carrier systems show an improved extravasation profile with enhanced localization in tumors and superior therapeutic efficacy in comparison to doxorubicin in free form. These properties are the result of an optimized liposome composition and of a special drug-loading method which produces stable and long-circulating carriers. In clinical studies, doxorubicin encapsulated in PEG-coated liposomes shows a unique pharmacokinetic-toxicity profile and promising antitumor activity.