1. This review brings together the information available to date regarding how taxol cytotoxicity and the development of resistance to this drug is affected by its cellular transport and intracellular binding. 2. Taxol, a potent anticancer drug first extracted from the bark of the Pacific yew tree, is extremely effective in the treatment of a wide range of malignancies. 3. Unlike other antimitotic drugs, taxol promotes the formation of highly stable microtubules that resist depolymerization by specifically binding to the N-terminal region of beta-tubulin. Taxol binding alters the conformation of the tubulin subunit, thus greatly retarding tubulin heterodimer dissociation. 4. Cell division is then blocked at the mitotic stage and the cell dies. 5. Besides this central mechanism, taxol exerts numerous other cellular effects. 6. Observations made with taxol-resistant murine and human tumor cells make it increasingly clear that the cellular transport of taxol and its microtubule binding activity are important factors in the development of resistance to this drug.