A copolymer of N-(2-hydroxypropyl)methacrylamide (HPMA) and N-(2-[4-hydroxyphenyl]ethyl)acrylamide (HPEA) was derivatized with 2-4 mole% of N-(2-[(cholest-5-en-3-yl(3-beta)oxycarbonyl)oxypropyl]methacrylamide residues (cholesteryl residues). The effect of polymer modification on some of its solution properties, and on its behaviour in vivo in experimental animals, has been examined. Using aqueous Size Exclusion Chromatography (SEC) and Photon Correlation Spectroscopy (PCS) at pH 7.4 in water (unbuffered), underivatized poly(HPMA-co-HPEA) was found to have a radius of gyration (Rg) of 8.0 nm, whereas the drug-modified copolymers, containing 2 and 4 mole% of the drug, when freshly dissolved, aggregated to form particles with Z-average hydrodynamic sizes (R(h)) of 188 nm and 243 nm, respectively. The particle size was not uniform and was found to change depending on the polymer concentration, ageing and sonication of the solution, solution temperature and ionic strength. The whole-body distribution of the 2 mole% cholesterol-substituted copolymer, following intravenous administration, was determined in mice. After 24 h, only 17% of the injected dose remained in the blood with 22% present in the liver, compared with 50% and 2% respectively, for the unmodified copolymer. These results suggest that in vivo even at a very low drug-loading, water-soluble carriers may not be able to provide sufficient protection of a hydrophobic drug from uptake by the liver (or other organs of the mononuclear phagocyte system).