Inhibition of the rapid uptake of liposomes by the reticulo-endothelial system (RES) and reduction of the rate of drug leakage have resulted in long-circulating liposomal drug systems with valuable pharmacologic properties. Particularly, the coating of liposomes with polyethylene-glycol (PEG) confers optimal protection to the vesicles from RES-mediated clearance, while bilayer rigidification using high T m phospholipids reduces the rate of leakage of liposome contents. These carrier systems display an improved extravasation profile with enhanced localization in tumors and possibly in other tissues, such as skin. An anti-cancer drug, doxorubicin, encapsulated in small-sized (< 100nm diameter), PEG-coated liposomes with a rigid bilayer shows a unique pharmacokinetic pattern, characterized by extremely long half-life, slow clearance, and small volume of distribution. Liposome longevity in circulation correlates positively with high drug levels in the extracellular tumor fluid and with enhanced therapeutic efficacy in a variety of tumor models regardless of the site of tumor growth. Examples of biodistribution studies will be presented for several murine tumors and human tumor xenografts inoculated by various routes, including a brain-implanted tumor. Liposome localization in tumors appears to be the result of an enhanced rate of extravasation through the abnormally permeable microvasculature of tumors coupled with an impaired lymphatic drainage. These results stress the potential of these long-circulating liposomal systems to manipulate the pharmacokinetics of anticancer drugs and enhance drug delivery to tumors. This therapeutic approach has been validated in AIDS-related Kaposi's sarcoma and is now undergoing extensive clinical testing in solid tumors.