The lipophilic anthracycline antibiotic annamycin (Ann) was entrapped in liposomes of different size [median diameter: 1.64 microns, multilamellar liposomal Ann (L-Ann); 0.030 micron, small unilamellar Ann (S-Ann)] with > 90% entrapment efficiency and tested in vitro against four pairs of sensitive and multidrug-resistant (MDR) tumor cell lines and in vivo by the i.v. route in five tumor models: advanced s.c. B16 melanoma; s.c. M5076 reticulosarcoma; lung metastases of Lewis lung carcinoma; and s.c. KB and KB-V1 xenografts in nude mice. Predetermined optimal doses of the different formulations were used and the results were compared with doxorubicin (Dox). In vitro, Ann, either in suspension in 10% dimethyl sulfoxide (F-Ann) (1 mg/ml) or entrapped in liposomes, was able to partially overcome resistance in all four pairs of sensitive and MDR KB, 8226, P388, and CEM cell lines (resistance indexes 63, 269, 333, and 356 for Dox versus 4, 5, 19, and 8.7 for L-Ann, respectively). In vivo, both F-Ann and liposome-entrapped Ann were slightly more effective than Dox in inhibiting the growth of advanced s.c. B16 melanoma tumors. L-Ann was markedly more effective than Dox and moderately more effective than F-Ann in prolonging the life span of animals bearing s.c. M5076 and lung metastases of Lewis lung carcinoma tumors. All drugs were equally effective at optimal doses in delaying the growth of s.c. KB xenografts, whereas all Ann formulations were markedly more effective than Dox in delaying the growth of s.c. KB-V1 (MDR) xenografts. In all in vivo experiments, S-Ann was consistently more effective than L-Ann and L-Ann was more effective than F-Ann. These results indicate that (a) Ann is more effective than Dox by the i.v. route against several tumor models and that MDR tumors are partially not cross-resistant to Ann both in vitro and in vivo, (b) liposomes enhance the in vivo antitumor properties of Ann, and (c) small liposomes are more effective than large liposomes in enhancing Ann antitumor activity.