7-Ethyl-10-hydroxy-camptothecin (SN-38), a metabolite of irinotecan x HCl, is poorly soluble in aqueous solutions and practically insoluble in most physiologically compatible and pharmaceutically acceptable solvents. Formulation of SN-38 in concentrated pharmaceutical delivery systems for parenteral administration is thus very difficult. Due to their biocompatibility and low toxicity, liposomes were considered for the delivery of SN-38. In this study, pegylated liposomes with distearoylphosphatidylcholine, distearoylphosphatidylethanolamine containing SN-38 were prepared and their characteristics, such as particle size, encapsulation efficiency, in vitro drug release and biodistribution, were investigated. The particle size of liposomes was in the range of 150--200 nm. The encapsulation efficiency and in vitro release rate of pegylated liposomes was higher than those of non-pegylated liposomes. As expected, the distribution of pegylated liposomes in body organs such as liver, kidney, spleen and lung was considerably lower than that of non-pegylated liposomes. Also, their blood concentration was at least 50 % higher than that of non-pegylated liposomes.