Anthracyclines, particularly conventional doxorubicin, play an important role in the treatment of breast cancer, both in the adjuvant and metastatic settings. However, the benefits of conventional doxorubicin in terms of antitumor activity are limited by its therapeutic index. Liposomal formulations were developed to increase the therapeutic index of conventional doxorubicin. Pegylated liposomal doxorubicin, the most widely studied liposomal doxorubicin formulation in breast cancer, has been evaluated in > 20 clinical trials. Pegylated liposomal doxorubicin provides tumor-targeted efficacy without many of the toxicities associated with conventional doxorubicin, including myelosuppression, alopecia, nausea and vomiting, and most importantly, cardiac toxicity. As a single agent, pegylated liposomal doxorubicin has demonstrated similar efficacy to that of conventional doxorubicin in patients with metastatic breast cancer. It has also demonstrated efficacy in combination with other agents or modalities, including cyclophosphamide, paclitaxel, docetaxel, gemcitabine, vinorelbine, and hyperthermia. Response rates in patients with metastatic breast cancer receiving pegylated liposomal doxorubicin either alone or in combination regimens range from 27% to 83%, with median survival estimated at 7-20 months. Small studies also suggest a role for pegylated liposomal doxorubicin in the treatment of locally advanced breast cancer. Preliminary results suggest that pegylated liposomal doxorubicin may be safely administered in combination with docetaxel and trastuzumab in patients with HER2-positive disease. Owing to its comparable efficacy and favorable safety profile, pegylated liposomal doxorubicin may be a useful alternative to conventional doxorubicin, as well as other agents commonly used in the treatment of breast cancer.