Peripheral nerve sheath tumors are benign tumors that have the potential to transform to malignant peripheral nerve sheath tumor (MPNST). In our initial study we found that majority of the MPNST cells and tissues express IL13Rα2 receptor, which could be a potential target for therapy. We have also observed earlier that the IL13 conjugated liposomal doxorubicin was effectively endocytosed by established MPNST cells like ST88-14 and sNF96.2 and induces cytotocity. To determine the in vivo efficacy, sciatic nerve tumor mouse model was developed by injecting the luciferase transfected STS26T cells in the sciatic nerve. The tumor progression was monitored following the injection of luciferin intraperitoneally and imaging with intravital imaging spectroscopy (IVIS). All the mice developed tumor in 2 weeks after implantation of tumor cells in the sciatic nerve as evidenced by IVIS imaging. Once the tumor was visualized the mice were treated with IL-13 conjugated and non-conjugated liposomal doxorubicin for 7 weeks at a low dose of 4 mg/kg body weight weekly once. Similarly the tumor sections from the mice which were treated with liposomes were analyzed for apoptotic markers like Caspase 3. The tumor volume, weight of the mice and the serum chemistry were recorded. Although the tumor progression was controlled initially, the efficacy was reduced with increasing tumor volume. So currently we are adopting a more frequent dosage regimen instead of weekly once strategy. Furthermore, as Ras activation has also been reported to promote the Schwann cell to MPNST transformation, we combined the doxorubicin with farnesyl thiosalicylic acid (FTS, a Ras inhibitor) in the liposome formulation to study their tumor regression property in such models. In conclusion we developed a successful MPNST animal model to monitor the tumor progression by non-invasive method and currently utilizing this model for investigating the therapeutic efficacy of multifunctional nanovesicles.