Anthracycline compounds including daunorubicin are the foundation of many modem chemotherapeutic regimens. However, the side-effects of these compounds can be severe, leading to alopecia, nausea, immune deficiency, and cardiotoxicity. For immunocompromised patients with aggressive Kaposi's sarcoma (KS), these complications often preclude the completion of appropriate chemotherapeutic regimens. This review focuses on the development and efficacy of liposomal daunorubicin (DaunoXome; DNX) carriers for the treatment of KS. Encouragingly, DNX demonstrated increased in vivo stability and specificity. As a result, KS patients benefit from higher cumulative chemotherapeutic doses without significant cardiotoxicity. Tumor response to DNX treatment surpasses that of non-encapsulated daunorubicin and is similar to that observed with conventional multi-drug therapies such as ABV (doxorubicin, bleomycin, vincristine). Moreover, some reports indicate the patient quality of life during therapy may improve with DNX treatment. Although the development of DNX represents a significant advance in KS therapy, recent data suggest that additional modification of the liposomal carrier to include pegylation or target specific antibodies may further increase daunorubicin efficacy in the future.