We prepared and characterised thermo-responsive magnetic liposomes, which were designed to combine features of magnetic targeting and thermo-responsive control release for hyperthermia-triggered local drug delivery. The particle size and zeta-potential of the thermo-responsive magnetic ammonium bicarbonate (MagABC) liposomes were about 210nm and -14mV, respectively. The MagABC liposomes showed encapsulation efficiencies of about 15% and 82% for magnetic nanoparticles (mean crystallite size 12nm) and doxorubicin (DOX), respectively. The morphology of the MagABC liposomes was visualised using transmission electron microscope (TEM). The MagABC liposomes showed desired thermo-responsive release. The MagABC liposomes, when physically targeted to tumour cells in culture by a permanent magnetic field yielded a substantial increase in intracellular accumulation of DOX as compared to non-magnetic ammonium bicarbonate (ABC) liposomes. This resulted in a parallel increase in cytotoxicity for DOX loaded MagABC liposomes over DOX loaded ABC liposomes in tumour cells.