Chemotherapy is a modality of cancer therapy that needs much improvement. Development of a new chemical entity is very costly and time consuming, but improvements in delivery of existing agents may yield more rapid clinical results. Liposomes and other lipid-based drug delivery systems have the advantage, in this context, of utilising no new chemical entities. In terms of mechanism of action, tumour targeting has been the focus of much work in liposomal drug delivery. The recent development of liposomes with longer circulation times has led to improved tumour targeting in animal studies. Other mechanisms of action, such as release from drug depot formulations, heat-triggered local drug release, and transfection of genetic materials, may prove to be useful in humans. Liposomal formulations of more than a dozen antineoplastic agents have shown promise in vitro and in animal models. Somewhat mundane, but nevertheless crucial, issues of medical rationale and formulation engineering, and commercial considerations, have slowed testing in patients with cancer. However, 3 antineoplastic agents, doxorubicin, daunorubicin and cytarabine, are in advanced stages of clinical testing in humans. One or more of these should prove to be a medically useful and commercially viable product within the next few years.