Arsenic trioxide (ATO) is a potent anti-tumor agent used to treat acute promyelocytic leukemia (APL), and more recently solid tumors including gliomas. However, the dose of ATO required to suppress gliomas is markedly higher than that used to treat APL, which leads to toxicity and undesirable side-effects, even though the local concentration of ATO in brains is relatively low after systemic administration. In an attempt to minimize the toxicity, enhance the penetrating activity across the blood-brain barrier, and reduce enzyme degradation, we prepared ATO encapsulated in liposomes, and investigated its therapeutic effect on C6 gliomas established in rat brains. The prepared ATO liposomes were stable at room temperature for 3 days and the latency rate was over 90% within 72 h. Intravenous injection of ATO liposomes led to a much higher concentration of ATO (5- fold, compared with ATO solution) in rat brains, resulting in inhibition of C6 gliomas in brains and prolonging the survival of rats bearing brain gliomas. ATO-liposome therapy resulted in fewer side effects, compared with free ATO solution. ATO-liposome therapy inhibited tumor angiogenesis by downregulating the expression of vascular endothelial growth factor (VEGF), and inducing cell apoptosis. The results warrant future investigation of the use of ATO encapsulated in liposomes to treat gliomas.