Pegylated liposomes have been studied for nearly two decades. However, fewer pharmacological studies about its application in daunorubicin (DNR) than those in doxorubicin have been reported. In order to conduct a complete pharmacokinetic study, radiolabeled DNR was encapsulated in pegylated liposomes. Its in vitro drug release kinetics was determined to be in a slow manner, which was reflected in its cytotoxic effect on four cell lines. The lethal dose, plasma pharmacokinetics as well as tissue distribution of the formulation were evaluated in comparison with free DNR. The results revealed that liposomal daunorubicin significantly reduced the toxicity of the drug, with a half lethal dose of 29.35 mg/kg, compared with 5.45 mg/kg for free drug. Pharmacokinetic study of liposomal DNR demonstrated a slower clearance rate, an elevated area under the concentration-time curve, as well as increased half-lives compared to free drug. In addition, an altered tissue distribution of liposomal DNR was observed, with lower cardiac accumulation. Taken together, pegylated liposome-loaded DNR may be a promising anticancer drug and worth further therapeutic study.