Our previous studies showed that acetyltanshinone IIA (ATA) has good anti-cancer effects, especially to breast cancer cells overexpressing estrogen receptor (ER). To improve its bioavailability and in vivo anti-cancer efficiency, polyethylene glycol (PEG)-modified liposomes were used to encapsulate ATA. The resulting liposomal ATA appeared in spherical shape with an average size of 132 nm. Thermodynamic study revealed that ATA was successfully and stably encapsulated within the liposomes achieving a much slower release profile compared with free ATA. Significantly, pharmacokinetics analysis showed that the AUC0-24h of liposomal ATA was 59-times higher than that of free ATA, demonstrating that this dosage formula can increase the bioavailability of ATA. In vitro evaluations showed that liposomal ATA retained the anti-breast cancer efficacy of ATA, meanwhile produced much less cytotoxicity towards nor-cancerous cells. Pharmacodynamics evaluation showed that liposomal ATA could effectively reduce the growth of ER-positive human breast tumor xenografts in nude mice. In vivo toxicity study revealed that liposomal ATA exhibited much lower level of toxicity compare to free ATA on zebrafish larval mortality, body formation and heart function during development. Moreover, the 7-day and 21-day tissue toxicity was determined in mice by intravenous administration of a maximum dosage of liposomal ATA (120 mg/kg). The results showed that no obvious tissue damage was observed in major organs including heart, liver, spleen, kidney, and brain. In summary, we have developed a clinical formulation of liposomal ATA with high bioavailability and good efficacy, which has a high potential to treat ER-positive breast cancer patients.