Taxol is a novel antitumor alkaloid that has shown clinical activity against several tumors. However, due to its low aqueous solubility, Cremophor EL (polyoxyethylated castor oil) and ethanol are used as excipients in the pharmaceutical drug formulations. These agents are implicated in hypersensitivity reactions. Hence the goal of this work was to design a novel Taxol formulation using polymeric nanoparticles to eliminate the Cremophor EL vehicle for drug delivery. Polyvinylpyrrolidone nanoparticles containing Taxol were prepared by a reverse microemulsion method. The size of the nanoparticles as determined by quasielastic light scattering was found to be between 50 and 60 nm. The antitumor effect of Taxol encapsulated nanoparticles was evaluated in B16F10 murine melanoma transplanted in C57B1/6 mice. The in vivo efficacy of Taxol-containing nanoparticles as measured by reduction in tumor volume and increased survival time was significantly greater than that of an equivalent concentration of free Taxol. These results suggest that encapsulation of Taxol in polymeric nanoparticles could be useful in improving its therapeutic efficacy in treatment of solid tumors.