Labd-14-ene-8, 13-diol (sclareol) is a labdane-type diterpene, which has demonstrated significant cytotoxic activity against human leukemic cell lines, but its effect on solid tumor-derived cells is uknown. Here, we demonstrate that addition of sclareol to cultures of human colon cancer HCT116 cells results in inhibition of DNA synthesis, arrest of cells at the G(1) phase of the cell cycle, activation of caspases-8, -9, PARP degradation, and DNA fragmentation, events characteristic of induction of apoptosis. Intraperitoneal (ip) administration of sclareol alone, at the maximum tolerated dose, was unable to induce suppression of growth of HCT116 tumors established as xenografts in immunodeficient SCID mice. In contrast, ip administration of liposome-encapsulated sclareol, following a specific schedule, induced suppression of tumor growth by arresting tumor cell proliferation as assessed by detecting the presence of the cell proliferation-associated nuclear protein, Ki67, in thin tumor sections. These findings suggest that sclareol incorporated into liposomes may possess chemotherapeutic potential for the treatment of colorectal and other types of human cancer.