The aim of this study was to design and prepare liposome-incorporated sclareol--a highly lipophilic natural product-to overcome its water insolubility and develop suitable formulations for in vivo administration. The bioactive labdane-type diterpene sclareol was incorporated into liposomes composed of egg phosphatidylcholine and dipalmitoylphosphatidylglycerol prepared by the thin-film hydration method followed by sonication. A formulation of egg phosphatidylcholine/dipalmitoylphosphatidylglycerol/sclareol (9:0.1:5 molar ratio) was developed and characterized. The lipid recovery and the sclareol to lipid molar ratio were measured using high-performance thin-layer chromatography/flame ionization detection. In vitro drug release was measured in supplemented RPMI-1640 at 37 degrees C. The liposomal and the free sclareol were initially tested in vitro for their activity against human cancer cell lines using the sulphorhodamine B assay. Liposomes incorporating sclareol at a drug to lipid molar ratio of 0:43, suggesting an incorporation efficiency of almost 80%, showed reduced growth rate of human colon cancer tumors (HCT116) developed in SCID mice, without any significant side effects.