A formulation of polyethylene glycol (PEG)-encapsulated irinotecan with antineoplastic activity. The prodrug irinotecan, a semisynthetic derivative of camptothecin, is converted to the biologically active metabolite 7-ethyl-10-hydroxy-camptothecin by a carboxylesterase-converting enzyme. One thousand-fold more potent than its parent compound irinotecan, 7-ethyl-10-hydroxy-camptothecin inhibits topoisomerase I activity by stabilizing the cleavable complex of topoisomerase I and DNA, resulting in DNA breaks that inhibit DNA replication and trigger apoptosis. Pegylation provides improved drug penetration into tumors and decreases drug clearance, thereby increasing the duration of therapeutic effects while lowering the toxicity profile.