Disseminated infections caused by the Mycobacterium avium-M. intracellulare complex (MAC) are the most frequent opportunistic bacterial infections in patients with AIDS. MAC isolates are resistant to many of the standard antituberculous drugs. Failure to obtain significant activities of certain drugs is due to difficulty in achieving high concentrations at the sites where the infections reside. New and improved agents for the treatment of mycobacterial infections are therefore required. Earlier, the anti-MAC activities of various agents in free or liposomal form were studied; liposomes were used as drug carriers to ultimately target the drugs to macrophages where mycobacterial infections reside. Clofazimine was chosen for further studies because it could be effectively encapsulated and its activity was well maintained in liposomal form. The present studies with both erythrocytes and macrophages as the model systems show that liposomal drug is far less toxic in vitro than the free drug. The in vivo toxicity of clofazimine was also significantly reduced after liposome encapsulation. The therapeutic efficacies of free and liposomal drugs were compared in a beige mouse model of disseminated MAC infection. An equivalent dose of liposomal drug (10 mg/kg of body weight) was more effective in eliminating the bacterial from the various organs studied, particularly from the liver. Moreover, because of the reduced toxicity of liposomal drug, higher doses could be administered, resulting in a significant reduction in the numbers of CFU in the liver, spleen, and kidneys. The data demonstrate that liposomal clofazimine is highly effective in the treatment of MAC infections, even if the treatment is initiated after a disseminated infection has been established. The present studies thus suggest the potential usefulness of liposomal clofazimine for the treatment of disseminated MAC infections.