7-Ethyl-10-hydroxycamptothecin (SN38) is a biologically active metabolite of irinotecan. Due to the variability of irinotecan metabolism rate to SN38, and poor solubility of this compound in pharmaceutically acceptable solvents, SN38 has not been successfully used in the clinic. In the present study, we prepared solid lipid nanoparticle (SLN) formulations containing SN38 and evaluated the in vitro and in vivo efficacy of these nanoparticles. SLNs and PEGylated SLNs containing SN38 (SLN-SN38 and PEG-SLN-SN38) were prepared using ultrasonication technique. Nanoparticles were characterized for size, zeta potential, and drug encapsulation efficiency. In vitro cytotoxicity of these compounds was evaluated in two colorectal carcinoma cell lines, namely C-26 and HT-116. In vivo antitumor efficacy of the formulations was evaluated in C-26 xenograft tumor mice models. Mice survival was also explored through 60 days post IV injection. Mean size of SLN-SN38 and PEG-SLN-SN38 was around 103 and 131 nm, respectively. Polydispersity index (PDI) for all the formulations was around 0.2 and zeta potential was negative (−5 to −15 mV). Nearly 90% of the drug was encapsulated in SLNs. SLN-SN38 and PEG-SLN-SN38 compared to irinotecan were significantly more toxic to C-26 and HT-116 cell lines after 48 h of exposure. Calculation of IC50 suggests higher sensitivity of HT-116 cells than C-26 cells to SLN-SN38 and PEG-SLN-SN38. Tumor inhibitory efficacy presented the highest efficacy in SLN-SN38. However, both SLN-SN38 and PEG-SLN-SN38 carriers showed higher efficiency to inhibit tumors compared to irinotecan (25 mg/kg).