Liposomal encapsulation of anthracyclines is a potential method of drug targeting, altering both the antitumour activity and side-effect profile of anthracyclines. Liposomal daunorubicin (daunoxome) shows both altered pharmacokinetics and a potential for reducing dose-limiting cardiotoxicity compared to conventional daunorubicin. Anthracyclines have a common role in the treatment of multiple myeloma, a prevalent and fatal haematological malignancy. Avoiding cumulative anthracycline toxicity in these patients is important. There is also a need for more effective relapse schedules given that many patients have chemosensitive disease at relapse. We have analysed daunoxome in vitro in myeloma cell lines using a thymidine-based cytotoxicity assay and show superior efficacy compared to a pegylated liposomal doxorubicin derivative. Subsequently we have treated seven relapsed myeloma patients with a regime consisting of oral CCNU 25-50 mg/m2 on day 1, 4 days of oral dexamethasone 10 mg/m2 and intravenous daunoxome (liposomal daunorubicin) given for 4 days (total 100 mg/m2). The main toxicity was myelosuppression but non-haematological toxicity was minimal and the regime was well tolerated. Four out of seven of these heavily pretreated patients responded. Together with the in vitro data on its cytotoxicity in myeloma and its favourable pharmacokinetic profile further studies of liposomal daunorubicin in myeloma would be warranted.