To enhance the efficacy of ganciclovir/herpes simplex virus thymidine kinase (GCV/HSV-TK) suicide gene therapy for nasopharyngeal cancer KB, we developed long-circulating liposome-encapsulated GCV, and evaluated cytotoxicity in vitro and in vivo. PEGylated liposome-encapsulated GCV (PEG-GCV-lipo) was prepared by the freeze-thawing method. In vitro experiments demonstrated that GCV from liposomes was gradually released over a period of 3 days. The in vitro cytotoxicity of PEG-GCV-lipo was similar to that of GCV solution in human cervical carcinoma HeLa cells expressing HSV-TK. Pharmacokinetics studies in mice showed that, compared with GCV solution, intravenous and intraperitoneal injection of PEG-GCV-lipo (10 mg/kg) led to long circulation in plasma; the area under the curve was 36-fold or 32-fold higher than that of GCV solution, respectively. In GCV/HSV-TK suicide gene therapy, the HSV-TK gene complexed with nanoparticle vector was directly injected into KB xenografts, and PEG-GCV-lipo or GCV solution was injected intravenously in mice once a day (25 mg/kg/day every 2nd day, 4 times). PEG-GCV-lipo was significantly 3-fold more effective than GCV solution in inhibiting tumor growth and produced durable complete tumor remissions on day 11 after injection. These findings demonstrate that long-circulating liposome-encapsulated GCV is a new approach to drug carriers to enhance the efficacy of suicide gene therapy.