Liposomal amphotericin (AmBisome) 2 mg/kg three times weekly was compared with placebo as prophylaxis against fungal infection in patients undergoing chemotherapy or bone marrow transplantation (BMT) for haematological malignancies. Prophylaxis began on day 1 of chemotherapy and continued until neutrophils regenerated or infection was suspected. Of 161 evaluable patients, 74 received AmBisome and 87 received placebo. Proven fungal infections developed in no patients on AmBisome and in three on placebo (3.4%) (P = NS). Suspected fungal infections requiring intervention with systemic antifungal therapy (usually amphotericin B) occurred in 31 patients on AmBisome (42%) and in 40 on placebo (46%) (P = NS). Suspected deep-seated infections developed in 21 (28.3%) and 31 (35.6%) patients, respectively (P = NS). Time to develop a suspected or proven deep-seated infection showed a trend in favour of AmBisome (P = 0.11). Fifty patients had fungal colonisation (48 with Candida spp, two with Aspergillus spp) of at least one body site during prophylaxis; 15 patients while receiving AmBisome (20%) and 35 while on placebo (40%) (P < 0.01). Time to colonisation was significantly delayed in the group receiving AmBisome (P < 0.05). Treatment-related toxicity was modest and no additional toxicity was observed in patients receiving AmBisome. AmBisome 2 mg/kg three times weekly is safe and reduces fungal colonisation in patients receiving intensive chemotherapy or BMT. However, despite encouraging trends, prophylactic AmBisome did not lead to a significant reduction in fungal infection or in requirement for systemic antifungal therapy.