Prednisolone phosphate (PLP) encapsulated in long-circulating liposomes can inhibit tumor growth after intravenous administration (i.v.). These antitumor effects of liposomal PLP are the result of the tumor-targeting property of the liposome formulation. The mechanism by which liposomal PLP inhibits tumor growth is unclear. We investigated the effects of liposome-encapsulated PLP versus free PLP on angiogenic protein production in tumor tissue in vivo and on viability and proliferation of tumor and endothelial cells in vitro. In vivo, liposomal PLP had a stronger reducing effect on pro-angiogenic protein levels than free PLP, whereas levels of anti-angiogenic proteins were hardly affected. Cell viability was only slightly affected with either treatment. Liposomal PLP had strong anti-proliferative effects on human umbilical vein endothelial cells, whereas free PLP had hardly any effect. Taken together, the present study points to a strong inhibitory effect of liposomal PLP on tumor angiogenesis by reduction of the intratumoral production of the majority of pro-angiogenic factors studied and direct inhibition of endothelial cell proliferation, which is the result of high prolonged levels of prednisolone in the tumor by liposomal delivery.