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Background: Three-dimensional (3D) in-vitro cultures are recognized for recapitulating the physiological microenvironment and exhibiting high concordance with in-vivo conditions. Taking the advantages of 3D culture, we have developed the in-vitro tumor model for anticancer drug screening. Methods: Cancer cells grown in 6 and 96 well AlgiMatrixTM scaffolds resulted in the formation of multicellular spheroids in the size range of 100--300 µm. Spheroids were grown in two weeks in cultures without compromising the growth characteristics. Different marketed anticancer drugs were screened by incubating them for 24 h at 7, 9 and 11 days in 3D cultures and cytotoxicity was measured by AlamarBlue® assay. Effectiveness of anticancer drug treatments were measured based on spheroid number and size distribution. Evaluation of apoptotic and anti-apoptotic markers was done by immunohistochemistry and RT-PCR. The 3D results were compared with the conventional 2D monolayer cultures. Cellular uptake studies for drug (Doxorubicin) and nanoparticle (NLC) were done using spheroids. Results: IC50 values for anticancer drugs were significantly higher in AlgiMatrixTM systems compared to 2D culture models. The cleaved caspase-3 expression was significantly decreased (2.09 and 2.47 folds respectively for 5-Fluorouracil and Camptothecin) in H460 spheroid cultures compared to 2D culture system. The cytotoxicity, spheroid size distribution, immunohistochemistry, RT-PCR and nanoparticle penetration data suggested that in vitro tumor models show higher resistance to anticancer drugs and supporting the fact that 3D culture is a better model for the cytotoxic evaluation of anticancer drugs in vitro. Conclusion: The results from our studies are useful to develop a high throughput in vitro tumor model to study the effect of various anticancer agents and various molecular pathways affected by the anticancer drugs and formulations. [ABSTRACT FROM AUTHOR]