This study reports on the development of a liposomal formulation of vincristine with significantly enhanced stability and biological properties. The in vitro and in vivo pharmacokinetic, tumour delivery and efficacy properties of liposomal vincristine formulations based on sphingomyelin (SM) and cholesterol were compared with liposomes composed of distearoylphosphatidylcholine (DSPC) and cholesterol. SM/cholesterol liposomes had significantly greater in vitro stability than did similar DSPC/cholesterol liposomes. SM/cholesterol liposomes also had significantly improved biological properties compared with DSPC/cholesterol. Specifically, SM/cholesterol liposomes administered intravenously retained 25% of the entrapped vincristine after 72 h in the circulation, compared with 5% retention in DSPC/cholesterol liposomes. The improved retention properties of SM/cholesterol liposomes resulted in plasma vincristine levels 7-fold higher than in DSPC/cholesterol liposomes. The improved circulation lifetime of vincristine in SM/cholesterol liposomes correlated with increased vincristine accumulation in peritoneal ascitic murine P388 tumours and in subcutaneous solid A431 human xenograft tumours. Increased vincristine delivery to tumours was also accompanied by increased anti-tumour efficacy. Treatment with SM/cholesterol liposomal formulations of vincristine resulted in greater than 50% cures in mice bearing ascitic P388 tumours, an activity that could not be achieved with the DSPC/cholesterol formulation. Similarly, treatment of mice with severe combined immunodeficiency (SCID) bearing solid human A431 xenograft tumours with SM/cholesterol vincristine formulations delayed the time required for 100% increase in tumour mass to > 40 days, compared with 5 days, 7 days and 14 days for mice receiving no treatment or treatment with free vincristine or DSPC/cholesterol formulations of vincristine respectively.