We compared the safety, toxicity, biocompatibility and anti-tumour efficacy of a novel chitosan-egg phosphatidylcholine (ePC) implantable drug delivery system that provides controlled and sustained release of paclitaxel (PTX(ePC)) versus commercial paclitaxel formulated in Cremophor EL (PTX(CrEL)). Toxicity studies were conducted in healthy CD-1 female mice, whereas efficacy studies were performed in the SKOV-3 xenograft model of ovarian cancer. Treatments consisted of intraperitoneal (IP) implantation of drug-free or PTX(ePC) formulations, IP bolus PTX(CrEL), or Cremophor EL (CrEL) vehicle. Toxicity was assessed as number of deaths, weight loss, serum hepatic enzyme levels and histopathological changes. Mice implanted with drug-free or PTX(ePC) formulations did not exhibit observable toxicities, local inflammation or fibrous encapsulation of the implant. In contrast, mice receiving PTX(CrEL) or CrEL encountered significant toxicity, lethality, abnormal peritoneal organ morphology and hepatic inflammation. The maximum tolerable dose (MTD) of PTX(CrEL) was 20 mg/kg/week, whereas PTX doses of up to 280 mg/kg/week were well tolerated when administered as PTX(ePC). Enhanced anti-tumour efficacy was achieved with PTX(ePC) in contrast to PTX(CrEL) with the same total dose of 60 mg/kg PTX. The novel PTX(ePC) formulation is a safer and better tolerated method for PTX administration, with significant increase in MTD and enhanced anti-tumour efficacy, suggesting improved therapeutic index with possible clinical implications in the treatment of ovarian tumours.