Compared with conventional chemotherapy, use of liposomes loaded with therapeutic agents is less toxic and more effective in experimental tumours in vivo. We have assessed efficacy and toxicity of liposomal daunorubicin (40 mg/m2 every 2 weeks) in 25 patients with HIV-associated Kaposi's sarcoma of poor prognosis. In 24 evaluable patients, there were 2 complete remissions (8.3%) and 13 partial remissions (54.2%). 5 of 11 patients with doxorubicin-resistant Kaposi's sarcoma had partial remissions. Median duration of response was 12 weeks. Quality of life improved after treatment with a response rate of 71% for physical performance and 74% for emotion. Myelosuppression was the commonest adverse event. Vomiting, stomatitis, and alopecia were rare and mild. Liposomal daunorubicin is safe and effective in HIV-associated Kaposi's sarcoma and improves quality of life. The treatment is effective even in patients resistant to other chemotherapy.