It is shown in the present study that RAW 264 tumor cells can be killed by liposomeentrapped dichloromethylene diphosphonate (DMDP), both in vitro and in vivo. DMDP is ingested by phagocytic cells when entrapped in liposomes. Once phagocytized the liposomal membranes are digested and the drug is released into the cell and is ready for action. In vitro, even low doses of liposome-entrapped DMDP caused an significant reduction in cell numbers. In vivo, liposome-encapsulated DMDP markedly reduced tumor formation in the liver, when given 1 day after injection of 1 × 10⁶ RAW 264 tumor cells. Liposome-encapsulated DMDP, given 4 or more days after injection of the tumor cells had no significant effect. We concluded that tumor formation by RAW 264 cells is only susceptible to in vivo treatment with liposome-entrapped DMDP during a short period of time after injection of the cells. Obviously, phagocytosis of the tumor cells is reduced after this period making the cells less susceptible to treatment with the liposome-entrapped drug.