The lactone stability of camptothecins is critical for their anticancer activity. A stable liposomal 9-nitro-camptothecin formulation was developed to circumvent the drawbacks of low aqueous solubility and lactone instability and to provide sustained release of the agent in blood circulation. The potential merits of the formulation were demonstrated by its profoundly improved lactone stability in vivo, favorable pharmacokinetic and biodistribution characteristics in rats, and enhanced preclinical efficacy in tumor-bearing athymic mice.