Although liposomes have been used as a vehicle for delivery of therapeutic agents in oncology, their efficacy in targeting brain tumors has been limited due to poor penetration through the blood-brain barrier. Because convection-enhanced delivery (CED) of liposomes may improve the therapeutic index for targeting brain tumors, we conducted a three-stage study: stage 1 established the feasibility of using in vivo magnetic resonance imaging (MRI) to confirm adequate liposomal distribution within targeted regions in normal rat brain. Liposomes colabeled with gadolinium (Gd) and a fluorescent indicator, 1,1'-dioctadecyl-3,3,3',3'-tetramethylindocarbocyanine-5,5'-disulfonic acid [DiI-DS; formally DiIC(18)(3)-DS], were administered by CED into striatal regions. The minimum concentration of Gd needed for monitoring, correlation of infused volume with distribution volume, clearance of infused liposome containing Gd and DiI-DS (Lip/Gd/DiI-DS), and potential local toxicity were evaluated. After determination of adequate conditions for MRI detection in normal brain, stage 2 evaluated the feasibility of in vivo MRI monitoring of liposomal distribution in C6 and 9L-2 rat glioma models. In both models, the distribution of Lip/Gd/DiI-DS covering the tumor mass was well defined and monitored with MRI. Stage 3 was designed to develop a clinically relevant treatment strategy in the 9L-2 model by infusing liposome containing Gd (Lip/Gd), prepared in the same size as Lip/Gd/DiI-DS, with Doxil, a liposomal drug of similar size used to treat several cancers. MRI detection of Lip/Gd coadministered with Doxil provided optimum CED parameters for complete coverage of 9L-2 tumors. By permitting in vivo monitoring of therapeutic distribution in brain tumors, this technique optimizes local drug delivery and may provide a basis for clinical applications in the treatment of malignant glioma.