To test the ability of nanoparticle formulations to overcome P-glycoprotein (P-gp)-mediated multidrug resistance, several different doxorubicin and paclitaxel-loaded lipid nanoparticles were prepared. Doxorubicin nanoparticles showed 6- to 8-fold lower IC 50 values in P-gp-overexpressing human cancer cells than those of free doxorubicin. The IC 50 value of paclitaxel nanoparticles was over 9-fold lower than that of Taxol in P-gp-overexpressing cells. A series of in vitro cell assays were used including quantitative studies on uptake and efflux, inhibition of calcein acetoxymethylester efflux, alteration of ATP levels, membrane integrity, mitochondrial membrane potential, apoptosis, and cytotoxicity. Enhanced uptake and prolonged retention of doxorubicin were observed with nanoparticle-based formulations in P-gp-overexpressing cells. Calcein acetoxymethylester and ATP assays confirmed that blank nanoparticles inhibited P-gp and transiently depleted ATP. I.v. injection of pegylated paclitaxel nanoparticles showed marked anticancer efficacy in nude mice bearing resistant NCI/ADR-RES tumors versus all control groups. Nanoparticles may be used to target both drug and biological mechanisms to overcome multidrug resistance via P-gp inhibition and ATP depletion.