Convection-enhanced delivery (CED) of highly stable PEGylated liposomes encapsulating chemotherapeutic drugs has previously been effective against malignant glioma xenografts. We have developed a novel, convectable non-PEGylated liposomal formulation that can be used to encapsulate both the topoisomerase I inhibitor topotecan (topoCED™) and paramagnetic gadodiamide (gadoCED™), providing an ideal basis for real-time monitoring of drug distribution. Tissue retention of topoCED following single CED administration was significantly improved relative to free topotecan. At a dose of 10 μg (0.5 mg/ml), topoCED had a half-life in brain of approximately 1 day and increased the area under the concentration–time curve (AUC) by 28-fold over free topotecan (153.8 vs. 5.5 μg day/g). The combination of topoCED and gadoCED was found to co-convect well in both naïve rat brain and malignant glioma xenografts (correlation coefficients 0.97–0.99). In a U87MG cell assay, the 50% inhibitory concentration (IC50) of topoCED was approximately 0.8 μM at 48 and 72 h; its concentration–time curves were similar to free topotecan and unaffected by gadoCED. In a U87MG intracranial rat xenograft model, a two-dose CED regimen of topoCED co-infused with gadoCED greatly increased median overall survival at dose levels of 0.5 mg/ml (29.5 days) and 1.0 mg/ml (33.0 days) vs. control (20.0 days; P < 0.0001 for both comparisons). TopoCED at higher concentrations (1.6 mg/ml) co-infused with gadoCED showed no evidence of histopathological changes attributable to either agent. The positive results of tissue pharmacokinetics, co-convection, cytotoxicity, efficacy, and lack of toxicity of topoCED in a clinically meaningful dose range, combined with an ideal matched-liposome paramagnetic agent, gadoCED, implicates further clinical applications of this therapy in the treatment of malignant glioma.