AbstractAnnamycin (Ann) is a non‐cross‐resistant lipophilic anthracy‐cline antibiotic optimally suited for liposome delivery. We studied how vesicle size and presence of phospholipids with a high phase transition temperature and monosialoganglioside (GM1) in the liposome bilayers affect the pharmacokinetics, tumor selectivity and toxicity of Ann. Entrapment of Ann in multilamellar vesicles (L‐Ann) resulted in a 20% lower heart AUC and a 30–40% higher tumor and liver AUC. Reduction of the liposome size from 1.6 to 0.03 μm increased Ann plasma circulation time and tumor AUC by 2‐fold, enhanced Ann tumor selectivity and decreased Ann subacute toxicity by 2‐fold. The presence of phospholipids with a high phase transition temperature and GM1 in the liposome bilayers further prolonged Ann plasma circulation time by 2‐ to 4‐fold, did not increase Ann tumor AUC and moderately increased Ann subacute toxicity. The anti‐tumor activity of Ann correlated with the tumor AUC achieved with each particular formulation. Our results strongly suggest that vesicle size may be an important determinant of the therapeutic index of liposomal Ann, but they fail to demonstrate a beneficial tumor‐targeting effect of liposomes composed of GM1 and phospholipids with a high phase transition temperature, as has been reported for the hydrophilic parent compound doxorubicin.