We have developed a novel liposome for sustained drug delivery to the eye of the antimetabolite 5-fluorouridine-5'-monophosphate (FUMP), a potent metabolite of 5-fluorouracil. The in vitro half-life of FUMP incorporated within these liposomes was 585 hours. Following subconjunctival administration of 1 mg of FUMP to 13 New Zealand white rabbits, the tissue drug level at the injection site was significantly greater in the group treated with liposomes than it was in the group not treated with liposomes (p = .02). These liposomes offer the potential for sustained release of FUMP in the eye. By controlling the rate of drug release, it may be possible to reduce the need for frequent drug administration and its associated ocular toxicity as well as to improve treatment efficacy.