A novel liposomal formulation of docetaxel targeting the folate receptor (FR) was synthesized and characterized. Liposomal formulations are less toxic and can provide longer systemic circulation time than the Tween 80 and ethanol based clinical formulation of docetaxel. Folate receptor-alpha (FR) is frequently over-expressed on epithelial cancer cells. Therefore, FR targeted liposomes can potentially enhance tumor cell uptake and antitumor efficacy of encapsulated drugs. The formulation studied had the compositions of egg phosphatidylcholine/cholesterol/methoxy-polyethylene glycol (PEG)2,000-distearoylphosphatidylethanolamine/folate-PEG3,350-cholesteryl hemisuccinate (ePC/Chol/mPEG-DSPE/folate-PEG-CHEMS) at ratios of (80:15:4.5:0.5, mol/mol) and a drug-to-lipid ratio of 1:20, wt/wt. Sucrose was used as a lyoprotectant. The liposomes were prepared by thin-film hydration, polycarbonate membrane extrusion, followed by lyophilization. They remained stable for more than 5 months when stored as lyophilized powder and for 72 h at 4 degrees C following rehydration. The mean particle size of reconstituted liposomes ranged from 110 to 120 nm. FR-targeted liposomes of the same lipid composition entrapping calcein were shown to be efficiently taken up by FR + KB oral carcinoma cells. FR-targeted liposomes containing docetaxel showed 4.4-fold greater cytotoxicity compared to non-targeted liposomes in KB cells. Plasma clearance profiles of FR-targeted and non-targeted liposomeal docetaxel were evaluated and compared with that of docetaxel in Tween 80/ethanol formulation. The liposomal formulations showed much longer terminal half lives (4.92 h and 6.75 h for FR-targeted and non-targeted, respectively) than docetaxel in Tween 80/ethanol solution (1.09 h). FR-targeted liposomes are promising tumor cell-selective nanocarriers for docetaxel with potential for therapeutic applications.