The effect of liposome encapsulation of the metabolic activation (phosphorylation) and degradation (deamination) of arabinofuranosylcytosine (Ara-C) in liver and spleen of dogs and mice was investigated. Ara-C in free or liposome-encapsulated form was administered i.v. to dogs and DBA2/CR mice bearing leukemia L1210. At various times after injection the concentration of Ara-C and Ara-C metabolites in the blood, liver and spleen was measured. It was shown that liposome encapsulation results in an increased Ara-C/arabinofuranosyluracil ratio in the liver and spleen of dogs and leukemic mice and that encapsulated Ara-C generates a sustained level of Ara-C triphosphate in the liver and spleen of leukemic mice. These results clearly indicate that 1) encapsulated Ara-C is protected against deamination in the liver, 2) encapsulated Ara-C is slowly released from liposomes in liver and spleen and 3) that liposomes may act as a local depot for Ara-C in these tissues.