We describe folate receptor targeted thermosensitive magnetic liposomes, which are designed to combine features of biological and physical (magnetic) drug targeting for use in magnetic hyperthermia-triggered drug release. The optimized liposome formulation DPPC:cholesterol:DSPE-PEG2000:DSPE-PEG2000-Folate at 80:20:4.5:0.5 molar ratio showed calcein release of about 70% both in PBS and in 50% FBS (fetal bovine serum) at 43°C and less than 5% release at 37°C following 1h incubation. Folate-targeted doxorubicin-containing magnetic liposomes of the above lipid composition (MagFolDox) showed encapsulation efficiencies of about 85% and 24% for doxorubicin and magnetic nanoparticles (mean crystallite size 10nm), respectively. This magnetic formulation displayed the desired temperature sensitivity with 52% doxorubicin release in 50% fetal bovine serum (FBS) following 1h incubation at 43°C. MagFolDox, when physically targeted to tumor cells in culture by a permanent magnetic field yielded a substantial increase in cellular uptake of doxorubicin as compared to Caelyx® (a commercially available liposomal doxorubicin preparation), non-magnetic folate-targeted liposomes (FolDox) and free doxorubicin in folate receptor expressing tumor cell lines (KB and HeLa cells). This resulted in a parallel increase in cytotoxicity over Caelyx® and FolDox. Magnetic hyperthermia at 42.5®C and 43.5®C synergistically increased the cytotoxicity of MagFolDox. The results suggest that an integrated concept of biological and physical drug targeting, triggered drug release and hyperthermia based on magnetic field influence can be used advantageously for thermo-chemotherapy of cancers. © 2009 Elsevier B.V.