Abstract. LPSF/AC04 (5Z)-[5-acridin-9-ylmethylene-3-(4-methyl-benzyl)-thiazolidine-2,4-dione] is an acridine-based derivative, part of a series of new anticancer agents synthesized for the purpose of developing more effective and less toxic anticancer drugs. However, the use of LPSF/AC04 is limited due to its low solubility in aqueous solutions. To overcome this problem, we investigated the interaction of LPSF/AC04 with hydroxypropyl-β-cyclodextrin (HP-β-CyD) and hydroxypropyl-γ-cyclodextrin (HP-γ-CyD) in inclusion complexes and determine which of the complexes formed presents the most significant interactions. In this paper, we report the physical characterization of the LPSF/AC04-HP-CyD inclusion complexes by thermogravimetric analysis, differential scanning calorimetry, infrared spectroscopy absorption, Raman spectroscopy, 1 HNMR, scanning electron microscopy, and by molecular modeling approaches. In addition, we verified that HP-β-CyD complexation enhances the aqueous solubility of LPSF/AC04, and a significant increase in the antiproliferative activity of LPSF/AC04 against cell lines can be achieved by the encapsulation into liposomes. These findings showed that the nanoencapsulation of LPSF/AC04 and LPSF/AC04-HP-CyD inclusion complexes in liposomes leads to improved drug penetration into the cells and, as a result, an enhancement of cytotoxic activity. Further in vivo studies comparing free and encapsulated LPSF/AC04 will be undertaken to support this investigation.