In an earlier report, we demonstrated the superior anticancer efficacy of orally administered squalenoyl gemcitabine (SQdFdC) nanomedicine over its parent drug gemcitabine on rats bearing RNK-16 large granular lymphocytic (LGL) leukemia. In the present communication, we investigated the mechanisms behind this observation both at the cell and tissue level. The mechanisms were investigated by performing cytotoxicity, cell uptake, and biodistribution experiments. In the presence of cytidine deaminase, SQdFdC nanoassemblies resisted deamination and exerted significant anticancer activity in vitro against RNK-16 LGL leukemia cells, whereas the cytotoxicity of free gemcitabine decreased by ∼83-fold, indicating its degradation due to deamination. Additionally, the SQdFdC showed considerably higher intracellular accumulation and retention compared with gemcitabine (P<0.05). Unlike gemcitabine, the cellular access to SQdFdC was not influenced by nucleoside transporters. When administered orally to rats, unlike 3H-gemcitabine, the 3H-SQdFdC absorbed slowly, but exhibited an improved pharmacokinetics and tissue distribution profile, particularly in the lymphoid organs (the major organs of metastasis). The resistance to deamination, followed by the improved pharmacokinetic and tissue distribution, and greater accumulation and retention at the level of cancer cells, are the key factors for the superiority of SQdFdC nanoassemblies over free gemcitabine against RNK-16 LGL leukemia in rats.