The amino acid homopolymers, poly-L-lysine and poly-L-ornithine, have been modified by the covalent attachment of palmitoyl and methoxypoly(ethylene glycol) (mPEG) residues to produce a new class of amphiphilic polymers-PLP and POP, respectively. These amphiphilic amino acid based polymers have been found to assemble into polymeric vesicles in the presence of cholesterol. Representatives of this new class of polymeric vesicles have been evaluated in vitro as nonviral gene delivery systems with a view to finding delivery systems that combine effective gene expression with low toxicity in vivo. In addition, the drug-carrying capacity of these polymeric vesicles was evaluated with the model drug doxorubicin. Chemical characterization of the modified polymers was carried out using (1)H NMR spectroscopy and the trinitrobenzene sulfonic acid (TNBS) assay for amino groups. The amphiphilic polymers were found to have an unreacted amino acid, palmitoyl, mPEG ratio of 11:5:1, and polymeric vesicle formation was confirmed by freeze-fracture electron microscopy and drug encapsulation studies. The resulting polymeric vesicles, by virtue of the mPEG groups, bear a near neutral zeta-potential. In vitro biological testing revealed that POP and PLP vesicle-DNA complexes are about one to 2 orders of magnitude less cytotoxic than the parent polymer-DNA complexes although more haemolytic than the parent polymer-DNA complexes. The polymeric vesicles condense DNA at a polymer:DNA weight ratio of 5:1 or greater and the polymeric vesicle-DNA complexes improved gene transfer to human tumor cell lines in comparison to the parent homopolymers despite the absence of receptor specific ligands and lysosomotropic agents such as chloroquine.