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Fenretinide is an effective anti-cancer drug with high in vitro cytotoxicity and low in vivo systemic toxicity. In clinical trials, fenretinide has shown poor therapeutic efficacy following oral administration – attributed to its low bioavailability and solubility. The long term goal of this project is to develop a formulation for the oral delivery of fenretinide. The purpose of this part of the study was to prepare and characterize hydrophilic nanoparticle formulations of fenretinide. Three different ratios of polyvinyl pyrrolidone (PVP) to fenretinide were used, namely, 3:1, 4:1, and 5:1. Both drug and polymer were dissolved in a mixture of methanol and dichloromethane (2:23 v/v). Rotary evaporation was used to remove the solvents, and, following reconstitution with water, a high pressure homogenizer was used to form nanoparticles. The particle size and polydispersity index were measured before and after lyophilization. The formulations were studied by scanning electron microscopy (SEM), differential scanning calorimetry (DSC), and X-ray powder diffraction (XRPD). The effectiveness of the formulations was assessed by release studies and Caco-2 cell permeability assays. As the PVP content increased, the recovered particle size following lyophilization became more consistent with the pre-lyophilization particle size, especially for those formulations with less lactose. The DSC scans of the formulations did not show any fenretinide melting endotherms, indicating that the drug was either present in an amorphous form in the formulation or that a solid solution of the drug in PVP had formed. For the release studies, the highest drug release among the formulations was 249.2 ± 35.5 ng/mL for the formulation with 4:1 polymer-to-drug. When the permeability of the formulations was evaluated in a Caco-2 cell model, the mean normalized flux for each treatment group was significantly higher (p < 0.05) from the fenretinide control. The formulation containing 4:1 polymer-to-drug ratio and 6:5 lactose-to-formulation ratio emerged as the optimal choice for further evaluation as a potential oral delivery formulation for fenretinide.