A lipophilic disaccharide tripeptide derivative of muramyl dipeptide (MDP) with immunomodulatory activity. Disaccharide tripeptide glycerol dipalmitoyl (DTP-GDP)stimulates macrophage activity and increases serum levels of tumor necrosis factor alpha (TNF alpha), neopterin, interleukin (IL)-1 alpha, IL-1 beta, IL-6, IL-8, and IL-12, which may activate host immune system antitumor functions. DTP-GDP may be packaged in liposomes for improved delivery. The immunomodulatory effects of this agent may be superior to those of MDP.