The objective of this study was to assess the efficacy and toxicity of a novel Stealth liposomal encapsulated formulation of doxorubicin (Doxil). A Phase I/II dose escalation study was carried out in a specialist HIV oncology unit in a teaching hospital (predominantly in an outpatient department). Fifteen patients with HIV related, biopsy confirmed, cutaneous Kaposi's sarcoma, with or without visceral involvement of sufficient severity to require systemic chemotherapy, were treated. Most patients had poor prognosis disease as assessed by the Tumour/Immune status/Systemic symptoms (TIS) system and Karnofsky indices; six patients had previously received combination chemotherapy. Primary treatment consisted of a dose of Doxil 10 mg/m2, repeated after 2 weeks. If the Kaposi's sarcoma (KS) responded and the treatment was tolerated, the patient began maintenance therapy at the same dose every 2 weeks. If there was no clinical response, the dose was increased to 20 mg/m2 for the further two cycles, before proceeding to maintenance therapy. Treatment continued until other intercurrent disease, lack of further response, patient preference, or toxicity precluded further treatment. Tumour response was assessed 2 weeks after completion of at least two cycles of chemotherapy. Toxicity was assessed for each cycle. Doxil was well tolerated, and toxicity was manageable, the principal toxicity being haematological. A partial response rate of 11/15 (73%) was achieved, with disease stabilization in the remaining patients. We conclude that Doxil is an effective palliative treatment for epidemic KS in a patient group with a poor predicted outcome.(ABSTRACT TRUNCATED AT 250 WORDS)