Liposomes containing dioleoyl-N-(monomethoxypoly(ethylene glycol)succinyl)- phosphatidylethanolamine (PEG-PE), and of three characteristic sizes (d > 300 nm, d approximately 150-200 nm, and d < 70 nm), were prepared, injected into mice, and their biodistributions examined following a radioactive lipid phase marker. The large and small liposomes accumulated to elevated levels in spleen and liver, respectively. The intermediate sized liposomes were found to be the longest circulating. Furthermore, when injected into mice bearing murine MC-38 colon carcinoma tumor, an approximate 2-fold increase in the % injected dose per g tumor was observed for the long-circulating liposomes compared to liposomes without PEG-PE. The distribution of the injected liposomes within the tumor was examined by fluorescence microscopy, where the liposomes were labeled with 1,1'-dioctadecyl-3,3,3',3'-tetramethylindocarbocyanine perchlorate (DiI). The liposomes were found surrounding blood vessels in the tumor, with some degree of extravasation into the tumor mass. A previous explanation for the reduced circulation time of small liposomes has been that they have an ability to pass through the fenestrated liver endothelium and thereby reach the parenchymal cells. DiI-labeled liposomes were therefore used to examine the intrahepatic distribution of the injected liposomes. Liposomes accumulated in liver were localized to Kupffer cells, regardless of liposome size. The small liposomes were not detectable in areas comprised of parenchymal cells when using this fluorescence technique. The reason for reduced long-circulating behavior for the small liposomes may be more directly related to the activity of PEG-PE. Therefore the steric barrier activity of the liposomes was examined by a serum protein binding assay and by streptavidin binding to biotinylated liposomes. The steric barrier was liposome size dependent, with the small liposomes revealing increased protein binding. This decreased steric barrier of the small liposomes may result in increased susceptibility to opsonization and thus explain their more rapid clearance from the circulation. The large liposomes accumulated in spleen were localized in the red pulp and marginal zone. Uptake of the large liposomes may occur by means of a filtration mechanism. These results establish the significance of liposome size in determining liposome circulation time and biodistribution, and are relevant for the optimal design of liposomes for drug delivery.