Abstract We have examined the efficacy of liposomalization and polyethyleneglycol (PEG) modification of liposomes on the antitumor activity, side-effects and tissue distribution of irinotecan hydrochloride (CPT-11). PEG-liposome was confirmed to elevate the plasma circulation of CPT-11 and SN-38 (active metabolite) concentrations. The tumor accumulation of CPT-11 and SN-38 was increased by the PEG-modified liposomes. The antitumor activity of CPT-11 increased due to the elevated tumor distribution of CPT-11 and SN-38 levels by the PEG-modified liposomes. In the tumor, CPT-11 was converted to SN-38. Thus, it is considered that passive targeting to the tumor by liposomalization elevated the SN-38 level in the tumor especially and increased the antitumor activity of CPT-11. Furthermore, intestinal disorder, a side toxicity of CPT-11, decreased dependent on the CPT-11 and SN-38 concentrations in the bile by liposomalization. Although the liposomes induce improved tissue distribution of the prodrug, the tissue distribution of active metabolites does not always improve. However, CPT-11-entrapped liposome was useful, as CPT-11 is converted to SN-38 in the tumor. These results suggested that the usefulness of CPT-11 could be extended.