Highly fluorescent 7-nitro-2,1,3-benzoxadiazol-4-yl-lipid (NBD-lipid) analogues are widely used to examine lipid transport and membrane structure. We have developed a method for chemically modifying NBD-labeled lipids in both artificial and biological membranes. This was achieved by treating fluorescently labeled membranes with dithionite (S2O4(-2)). When small unilamellar vesicles containing NBD-labeled phospholipids were reacted with dithionite, only the fluorescent lipid located on the outer leaflet of the vesicles' bilayer was reduced. Seven different NBD-lipid analogues, including a fluorescent sterol, were reduced by treatment with dithionite to nonfluorescent 7-amino-2,1,3-benzoxadiazol-4-yl-lipid derivatives. To assess the feasibility of using this reagent in biological systems, N-(7-nitro-2,1,3-benzoxadiazol-4-yl)dioleoylphosphatidylethanol ami ne was inserted into the outer leaflet of the plasma membrane of CHO-K1 cells. Subsequent incubation of these cells with a nontoxic concentration of dithionite resulted in the complete loss of fluorescence from the plasma membrane. In contrast, when cells were permitted to endocytose some of their fluorescently labeled plasma membrane and then treated with dithionite, fluorescence at the plasma membrane was eliminated, while intracellular labeling was not affected. These data suggest that dithionite reacts with NBD-labeled lipids in the outer leaflet of membrane bilayers, producing nonfluorescent derivatives. We demonstrate how reduction of NBD-lipids with dithionite can be used to prepare asymmetrically labeled liposomes and to measure transverse-membrane asymmetry in vesicles. This method should be useful in many biochemical investigations, including the measurement of phospholipid translocase activity.