BACKGROUND: Drug delivery and penetration into neoplastic cells distant from tumor vessels is critical for the effectiveness of solid tumor chemotherapy. We hypothesized that 10- to 20-nm nanoassemblies of phospholipids containing doxorubicin would improve the drugʼs penetration, accumulation, and antitumor activity. METHODS: Doxorubicin was incorporated into polyethylene glycol–phosphatidylethanolamine (PEG-PE) block copolymer micelles by a self-assembly procedure to form nanoassemblies of doxorubicin and PEG-PE. In vitro cytotoxicity of micelle-encapsulated doxorubicin (M-Dox) against A549 human non–small-cell lung carcinoma cells was examined using the methylthiazoletetrazolium assay, and confocal microscopy, total internal reflection fluorescence microscopy, and flow cytometry were used to examine intracellular distribution and the cellular uptake mechanism. C57Bl/6 mice (n=10–40 per group) bearing subcutaneous or pulmonary Lewis lung carcinoma (LLC) tumors were treated with M-Dox or free doxorubicin, and tumor growth, doxorubicin pharmacokinetics, and mortality were compared. Toxicity was analyzed in tumor-free mice. All statistical tests were two-sided. RESULTS: Encapsulation of doxorubicin in PEG-PE micelles increased its internalization by A549 cells into lysosomes and enhanced cytotoxicity. Drug-encapsulated doxorubicin was more effective in inhibiting tumor growth in the subcutaneous LLC tumor model (mean tumor volumes in mice treated with 5 mg/kg M-Dox=1126 mm3 and in control mice=3693 mm3, difference=2567 mm, 95% confidence interval [CI]=2190 to 2943 mm, P<.001) than free doxorubicin (mean tumor volumes in doxorubicin-treated mice=3021 mm3 and in control mice=3693 mm3, difference=672 mm, 95% CI=296 to 1049 mm, P=.0332, Wilcoxon signed rank test). M-Dox treatment prolonged survival in both mouse models and reduced metastases in the pulmonary model; it also reduced toxicity. CONCLUSIONS: We have developed a novel PEG-PE–based nanocarrier of doxorubicin that increased cytotoxicity in vitro and enhanced antitumor activity in vivo with low systemic toxicity. This drug packaging technology may provide a new strategy for design of cancer therapies.