Paclitaxel loaded thermosensitive magnetoliposomes containing 1,2-dipalmitoyl-sn-glycero-3-phosphocholine (DPPC) and 1-palmitoyl-2-oleoyl-sn-glycero-3-phospho-rac-glycerol (PG) were prepared by thin film hydration method. Encapsulation efficiencies of paclitaxel and citric acid coated Fe(3)O(4) nanoparticles were 83±3% and 74.6±5%, respectively. Based on the release study, DPPC/PG in 9:1 (w/w) liposomes (PCPG) formulation was found to be thermosensitive and showed 46 fold higher drug release at 43 °C than at 37 °C. Drug release was done under an alternating magnetic field of intensity 10 kA/m and a fixed frequency of 423 kHz. In-vitro cytotoxicity and hyperthermia studies were carried out using a human cervical cancer cell line (HeLa). IC(50) value of the magnetoliposomes formulation was 100 nM. When the magnetoliposomes with 100 nM drug was used to treat HeLa cells in combination with hyperthermia under AC magnetic field, 89% cells were killed and were found to be more effective than either hyperthermia or chemotherapy alone. So, PCPG liposomes which co-encapsulate both Fe(3)O(4) nanoparticles and paclitaxel may be useful for combined chemotherapy and hyperthermia.