A Chinese hamster cell line (LZ), selected for multidrug resistance (MDR), exhibits a 3,000-fold resistance to doxorubicin, compared to parental V-79 cells. These drug resistant cells have amplified MDR genes, overexpress P-glycoprotein, and in the presence of doxorubicin show reduced intracellular drug accumulation. Using liposome-encapsulated doxorubicin (Rahman et al. Cancer Res. 45:796-803; 1985), we observed partial reversal of the resistance of LZ cells to this drug and a higher intracellular drug accumulation, compared to free drug. Parental V-79 cells, however, did not exhibit differences in survival or in drug accumulation when treated with encapsulated or free doxorubicin. Comparison of the effect of liposome-encapsulated doxorubicin with that of verapamil in reversing drug resistance showed that the liposomal preparation was as effective as verapamil used at its maximum clinically relevant concentration (1.5 microM). These results suggest that the use of liposomes as carriers of anticancer drugs may offer a strategy for overcoming MDR in tumor cells.