Taxol is a complex diterpenoid natural product under investigation for therapy of colon, ovarian, lung, and breast cancer, as well as for melanoma and lymphoma. One problem associated with the administration of Taxol is its low solubility; the formulation used clinically contains polyethoxylated castor oil (Cremophor EL) and ethanol as excipients. Cremophor EL is implicated in hypersensitivity reactions observed on infusion of Taxol. To eliminate the Cremophor EL vehicle and possibly improve the antitumor efficacy of Taxol, a systematic approach was taken to formulate Taxol in phospholipid suspensions (liposomes). Prototype formulations were developed that have sufficient chemical and physical stability to test the hypothesis that liposomes can alter the pharmacology of Taxol, in addition to providing a biologically compatible carrier in which to administer the drug. In vitro. Taxol liposomes retain the growth-inhibitory activity of free Taxol against a variety of tumor cell lines. In vivo, preliminary results showed no effect of free Taxol (in Cremophor EL) on the growth of Colon-26, a Taxol-resistant murine tumor, when given at doses that included or exceeded the maximum tolerated dose (MTD). In contrast, Taxol liposomes delayed tumor progression at a dose that exceeded the MTD of free Taxol.