We have previously demonstrated that liposome-incorporated methylphosphonate antisense oligodeoxynucleotides (oligos) specific for BCR-ABL can selectively inhibit the expression of p210Bcr-Abl protein and the proliferation of chronic myelogenous leukemia cells in vitro. Here, we show that liposome-entrapment of phosphodiester and phosphorothioate oligos specific for BCR-ABL can also selectively inhibit the proliferation of chronic myelogenous leukemia cells. We have studied the intracellular localization of liposomes by fluorescent microscopy and found that liposomes are readily taken up by leukemic cells and are localized in the cytoplasm, allowing increased access of oligos to target cells intracellularly. Liposomal oligos are not toxic to peripheral blood mononuclear cells nor to bone marrow progenitors isolated from normal hematological donors. These studies strongly suggest that liposomal delivery of oligos may indeed circumvent the major limitations that preclude the clinical development of antisense oligos.