Paclitaxel is a potent anticancer agent with limited bioavailability due to side-effects associated with solubilizer used in its commercial formulation and the tendency of the drug to precipitate in aqueous media. In this study, paclitaxel was encapsulated in amphiphilic cyclodextrin nanoparticles. Safety of blank nanoparticles was compared against commercial vehicle cremophor:ethanol (50:50 v/v) by hemolysis and cytotoxicity experiments. Data revealed that nanoparticles caused significantly less hemolysis. Results were confirmed with SEM imaging of erythrocytes treated with nanospheres, nanocapsules or commercial vehicle. Cytotoxicity of the blank carriers was evaluated against L929 cells. A vast difference between the cytotoxicity of nanoparticles and cremophor:ethanol mixture was observed. Physical stability of paclitaxel in nanoparticles was assessed for 1 month with repeated particle size and zeta potential measurements and AFM imaging. Recrystallization of paclitaxel, very typical in diluted aqueous solutions of the drug, did not take place when the drug is bound to cyclodextrin nanoparticles. Anticancer efficacy of paclitaxel-loaded nanoparticles was evaluated in comparison to paclitaxel in cremophor vehicle against MCF-7 cells. Cyclodextrin nanoparticle caused a slightly higher anticancer effect than cremophor:ethanol vehicle. Thus, amphiphilic cyclodextrin nanoparticles emerged as promising alternative formulations for injectable paclitaxel administration with low toxicity and equivalent efficacy.