Liposomal amphotericin B (AmBisome(®); LAmB) is a unique lipid formulation of amphotericin B. LAmB is a standard of care for a wide range of medically important opportunistic fungal pathogens. LAmB has a significantly improved toxicity profile compared with conventional amphotericin B deoxycholate (DAmB). Despite nearly 20 years of clinical use, the pharmacokinetics and pharmacodynamics of this agent, which differ considerably from DAmB, remain relatively poorly understood and underutilized in the clinical setting. The molecular pharmacology, preclinical and clinical pharmacokinetics, and clinical experience with LAmB for the most commonly encountered fungal pathogens are reviewed. In vitro, experimental animal models and human clinical trial data are summarized, and novel routes of administration and dosing schedules are discussed. LAmB is a formulation that results in reduced toxicity as compared with DAmB while retaining the antifungal effect of the active agent. Its long terminal half-life and retention in tissues suggest that single or intermittent dosing regimens are feasible, and these should be actively investigated in both preclinical models and in clinical trials. Significant gaps remain in knowledge of pharmacokinetics and pharmacodynamics in special populations such as neonates and children, pregnant women and obese patients.