In an attempt to improve anticancer activity and reduce systemic toxicity of doxorubicin (Dox), we encapsulated Dox in monomethoxy poly(ethylene glycol)-poly(ε-caprolactone) (MPEG-PCL) micelles by a novel self-assembly procedure without using surfactants, organic solvents or vigorous stirring. These Dox encapsulated MPEG-PCL (Dox/MPEG-PCL) micelles with drug loading of 4.2% were monodisperse and ∼ 20 nm in diameter. The Dox can be released from the Dox/MPEG-PCL micelles; the Dox-release at pH 5.5 was faster than that at pH 7.0. Encapsulation of Dox in MPEG-PCL micelles enhanced the cellular uptake and cytotoxicity of Dox on the C-26 colon carcinoma cell in vitro, and slowed the extravasation of Dox in the transgenic zebrafish model. Compared to free Dox, Dox/MPEG-PCL micelles were more effective in inhibiting tumor growth in the subcutaneous C-26 colon carcinoma and Lewis lung carcinoma models, and prolonging survival of mice bearing these tumors. Dox/MPEG-PCL micelles also induced lower systemic toxicity than free Dox. In conclusion, incorporation of Dox in MPEG-PCL micelles enhanced the anticancer activity and decreased the systemic toxicity of Dox; these Dox/MPEG-PCL micelles are an interesting formulation of Dox and may have potential clinical applications in cancer therapy.