Glucocorticoids are the cornerstone in the clinic for treatment of hematological malignancies, including multiple myeloma. Nevertheless, poor pharmacokinetic properties of glucocorticoids require high and frequent dosing with the off-target adverse effects defining the maximum dose. Recently, nanomedicine formulations of glucocorticoids have been developed that improve the pharmacokinetic profile, limit adverse effects and improve solid tumor accumulation. Multiple myeloma is a hematological malignancy characterized by uncontrolled growth of plasma cells. These tumors initiate increased angiogenesis and microvessel density in the bone marrow, which might be exploited using nanomedicines, such as liposomes. Nano-sized particles can accumulate as a result of the increased vascular leakiness at the bone marrow tumor lesions. Pre-clinical screening of novel anti-myeloma therapeutics in vivo requires a suitable animal model that represents key features of the disease. In this study, we show that fluorescently labeled long circulating liposomes were found in plasma up to 24 h after injection in an advanced human-mouse hybrid model of multiple myeloma. Besides the organs involved in clearance, liposomes were also found to accumulate in tumor bearing human-bone scaffolds. The therapeutic efficacy of liposomal dexamethasone phosphate was evaluated in this model showing strong tumor growth inhibition while free drug being ineffective at an equivalent dose (4 mg/kg) regimen. The liposomal formulation slightly reduced total body weight of myeloma-bearing mice during the course of treatment, which appeared reversible when treatment was stopped. Liposomal dexamethasone could be further developed as monotherapy or could fit in with existing therapy regimens to improve therapeutic outcomes for multiple myeloma.