A liposome encapsulated formulation of the semisynthetic camptothecin analogue topotecan with potential antineoplastic activity. Upon administration, liposomal topotecan FF-10850 preferentially releases topotecan, a cytotoxic, quinoline-based alkaloid extracted from the Asian tree Camptotheca acuminate, into the tumor environment. Topotecan inhibits topoisomerase I activity by stabilizing the topoisomerase I-DNA covalent complexes during S phase of the cell cycle, thereby inhibiting religation of topoisomerase I-mediated single-strand DNA breaks and producing potentially lethal double-strand DNA breaks when encountered by the DNA replication machinery. The novel liposome used in this agent prolongs its serum half-life while promoting efficient drug delivery into the cytosol from the endosome compartment of the tumor cell, which may minimize the adverse effect of bone marrow suppression.