The use of liposomal carriers and the modification of therapeutic molecules through the attachment of poly(ethylene glycol) [PEG] moieties ('pegylation') are the most common approaches for enhancing the delivery of parenteral agents. Although 'classical' liposomes (i.e. phospholipid bilayer vehicles) have been effective in decreasing the clearance of encapsulated agents and in passively targeting specific tissues, they are associated with considerable limitations. Pegylation may be an effective method of delivering therapeutic proteins and modifying their pharmacokinetic properties, in turn modifying pharmacodynamics, via a mechanism dependent on altered binding properties of the native protein. Pegylation reduces renal clearance and, for some products, results in a more sustained absorption after subcutaneous administration as well as restricted distribution. These pharmacokinetic changes may result in more constant and sustained plasma concentrations, which can lead to increases in clinical effectiveness when the desired effects are concentration-dependent. Maintaining drug concentrations at or near a target concentration for an extended period of time is often clinically advantageous, and is particularly useful in antiviral therapy, since constant antiviral pressure should prevent replication and may thereby suppress the emergence of resistant variants. Additionally, PEG modification may decrease adverse effects caused by the large variations in peak-to-trough plasma drug concentrations associated with frequent administration and by the immunogenicity of unmodified proteins. Pegylated proteins may have reduced immunogenicity because PEG-induced steric hindrance can prevent immune recognition. Two PEG-modified proteins are currently approved by the US Food and Drug Administration; several others, including cytokines such as interferon-alpha (IFNalpha), growth factors and free radical scavengers, are under development. Careful assessment of various pegylated IFNalpha products suggests that pegylated molecules can be differentiated on the basis of their pharmacokinetic properties and related changes in pharmacodynamics. Because the size, geometry and attachment site of the PEG moiety play a crucial role in determining these properties, therapeutically optimised agents must be designed on a protein-by-protein basis.