Carrier-based formulations of cytotoxic agents may be highly efficacious for intracavitary therapy of malignancies which reside in or metastasize to the peritoneal cavity. N-(Phosphonacetyl)-L-aspartic acid (PALA) is a transition-state inhibitor of aspartate transcarbamylase which has shown enhanced activity against several cell lines upon encapsulation in liposomes. We have examined the growth inhibitory effects of PALA-containing liposome formulations against four human ovarian cancer cell lines (Ovcar-3, Hey-1b, A90, and A121a) that have significantly different growth characteristics. With the optimal liposome formulation defined in the present studies, the potency of encapsulated PALA was 22- to 570-fold greater than that of free PALA, depending on the cell line. Control liposomes containing buffer, rather than PALA, did not inhibit cell growth. Fluorescence studies of liposome-cell interaction suggest that high liposome negative surface charge density and high phase transition temperature increase both cellular association and retention of liposome contents. Briefer exposure of tumor cells to treatment accentuates the advantage of liposome formulations; on Hey-1b cells, the cytostatic effect of 1-hr exposure to PALA-liposomes is 900-fold greater than is the equivalent exposure to free PALA. The considerable increase in in vitro potency of PALA-liposome formulations, coupled with potential pharmacokinetic advantages in vivo (i.e., intraperitoneal retention of liposome-associated drug versus rapid clearance of free PALA), suggests the possibility of enhanced antitumor activity of liposome-encapsulated PALA for both single-agent and combination chemotherapy.