Liposomes improve the pharmacokinetics and safety of rapidly cleared drugs, but have not yet improved the clinical efficacy compared to the non-encapsulated drug. This inability to improve efficacy may be partially due to the non-uniform distribution of liposomes in solid tumors. The tumor extra-cellular matrix is a barrier to distribution and includes the high molecular weight glycosaminoglycan, hyaluronan (HA). Strategies to remove HA or block its synthesis may improve drug delivery into solid tumors. Orally administered methylumbelliferone (MU) is an inhibitor of HA synthesis, but it is limited by low potency and limited solubility. In this study, we encapsulate a water-soluble phosphorylated prodrug of MU (MU-P) in a liposome (L-MU-P). We demonstrate that L-MU-P is a more potent inhibitor of HA synthesis than oral MU in the 4T1 murine mammary carcinoma model using both a quantitative ELISA and histochemistry. We show that HA depletion improves the tumor distribution of liposomes computed using Mander's colocalization analysis of liposomes with the tumor vasculature. Hyaluronan depletion also increases the fraction of the tumor area positive for liposomes. This improved distribution extends the overall survival of mice treated with Doxil®.