ABSTRACT Drug delivery using liposomes increases tumor drug accumulation while sparing normal tissue. Several liposomal chemotherapies are approved to treat cancer. Unfortunately, lipid nanoparticles such as liposomes interact with the immune system and their impact on the tumor immunologic milieu is largely unknown. We have reported that liposomes composed of phospholipids and cholesterol, similar to those used in patients, doubled tumor size in mice by suppressing the immune response against tumors. We recently identified macrophages as the cells that are responsible for these detrimental effects. In this proposal, we seek to identify the precise molecular mechanisms. Our preliminary data show that liposomal cholesterol is metabolized into oxysterols that are known to alter the function of macrophages. Based on this, we theorize that liposomal oxysterols cause macrophages to suppress antitumor immunity and enhance tumor growth. Notably, oxidized metabolites of beta-sitosterol (a plant sterol) lack the protumoral inflammatory activity of oxysterols, suggesting that more efficacious liposomal drug formulations can be developed using analogs of cholesterol. The objectives of this proposal are to understand the metabolism of liposomal cholesterol and to develop cholesterol analogs without tumorigenic effects for liposomal drug formulation. We will dissect the metabolism pathways by conducting time-dependent studies in immune cells and in mouse models. To identify the metabolic and cell signaling pathways that are involved, we will conduct mechanistic studies in wildtype and knockout mice, and donor human immune cells. Finally, we will design and test the immunological and anticancer effects of cholesterol analogs in immune cells and in mouse models of cancer. Our team has unique combined expertise necessary for successful completion of this project. This proposal is expected to have a positive impact by addressing critical gaps in current understanding of the role of the immune system in liposomal drug pharmacology and the role of oxidized sterols in cancer. This is likely to lead to new therapeutic targets and drug formulation strategies with potential to significantly advance both cancer drug delivery and immunotherapy.