Actinomycin D, when encapsulated within liposomes, has been previously shown to be less toxic to mice than nonencapsulated actinomycin D, but to retain its tumoricidal activity. We have compared the toxic effects of Act D encapsulated either in the aqueous phase or in the lipid phase of liposomes (APL and LPL, respectively), and the nonencapsulated Act D on the blood forming system, on cell proliferation in the intestine, and on antibody production by spleen lymphocytes. At a single dose of 0.4 mg/kg, APL-encapsulated Act D wass less toxic to white blood cells and to the nucleated cells and colony-forming stem cells of the bone marrow. During toxicity in the proliferating intestinal cells, measured by 3H-thymidine incorporation, was reduced by about a factor of 4 with encapsulation in APL, particularly 24 hours after Act D administration. The toxiciaty of LPL-encapsulated Act D to both the blood-forming system and the intestinal proliferating cells was, however, not significantly different from that of the nonencapsulated Act D. Effects of Act D on the antibody production by spleen cells, determined by the "limited hemolysis in agar" assay, showed that immunosuppression was most markedly reduced by liposome encapsulation either in APL or in LPL, when the drug was given one day before the antigen. These findings are important for considerations of liposome application in cancer chemotherapy.