This study describes formation of an actively and passively targeted, water-soluble drug delivery system (DDS) which contains doxorubicin (DOX). The system comprises two biocompatible and biodegradable polymers: poly-γ-glutamic acid (PGA) and chitosan (CH). Self-assembly of these biopolymers in aqueous medium results stable nanoparticles (NPs) with a hydrodynamic size of 80-150 nm and slightly negative surface charge. Folic acid (FA) was used as targeting agent bonded to the polyanion (PA) and also to the surface of the NPs. The NP's physical stability, active targeting effect, cellular toxicity, release profile and anti-tumor efficacy were investigated. It was found that the targeted, self-assembled nanoparticles are stable at 4°C for several months, cause better toxicity effect on folate receptor (FR) positive cell lines than the doxorubicin or the non-targeted nanosystem and based on its release profile it is expected, that the nanosystem will remain stable during the circulation in the body. Pharmacodynamic studies demonstrated that the DOX-loaded nanoparticles can deliver greater tumor growth inhibition than the free drug molecules and the liposomal compound, with less general toxicity. It was observed that the overall survival is the main benefit of the biopolymer based drug delivery system.