Topotecan (TPT), a topoisomerase I inhibitor, is presently undergoing clinical evaluation worldwide. Previous studies have shown that entrapping TPT within multi-lamellar vesicle liposome can stabilize the lactone moiety, which is structurally important for biological activity. However, low drug:lipid ratios due to the amphipathic character and small entrapment volume in the unilamellar vesicle limits the development of pharmaceutically acceptable liposomal formulation. With an aim to improve on this drawback, we herein describe a method that utilizes the ammonium sulfate gradient to entrap TPT into liposomes. By this method, the encapsulation efficiency was over 90% and a drug:lipid molar ratio as high as 1:5.4 was reached. In comparison with free drug, liposome-encapsulated TPT is more stable in physiological conditions and shows higherin vitrocytotoxicity. Because of increased blood circulation time, the initial plasma concentration and area under the plasma concentration of liposomal drugs were 14 and 40 times, respectively, of those of free drug. Furthermore, liposome encapsulation enhanced the antitumor activity of TPT in syngeneic murine C-26 and human HTB-9 xenograft modelsin vivo. At a dose of 5 mg/kg, the tumor growth delay of liposomal formulation was significantly than that of free TPT. Based on these results, we believe that this liposomal TPT formulation is worthy of further clinical study.