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Conventional and sterically stabilized liposomes derived from phosphatidylcholine or the antitumor agents, hexadecylphosphocholine and octadecyl-(1,1-dimethyl-4-piperidino-4-yl)-phosphate, as bilayer forming constituents, containing bleomycin, were developed and tested. Liposomal encapsulation of bleomycin enhanced strongly the antitumor activity against P388 leukemia and the Lewis lung carcinoma. This effect was clearly dependent on the size and lipid composition of the bleomycin-containing liposomes. The therapeutic effects were nearly equal for liposomal and free bleomycin in the B16 melanoma. The partial replacement of phosphatidylcholine by alkylphospholipids and the inclusion of polyethylene glycol modified lipids for sterical stabilization did not further improve the therapeutic efficacy but increased, in some cases, the toxicity of liposomes. Bleomycin-induced lung injury was not observed if liposomal bleomycin was administered.