Rat serosal mast cells contain secretory granules composed of a heparin proteoglycan matrix in which neutral proteases are embedded. Stimulation of the mast cells leads to granule exocytosis and formation of two pools of granules located extracellularly, firstly, granules expelled into the 'free' extracellular space and ultimately phagocytosed by the scavenging cells in the vicinity of mast cells and, secondly, granules which remain associated with their parent mast cells, and become internalized by them during recovery from stimulation. If mast cells are stimulated in the presence of macrophages in a low density lipoprotein (LDL)-containing medium, LDL is bound to the heparin proteoglycan component of the exocytosed granules whether they are expelled into the 'free' extracellular space or remain associated with the mast cells. The granules located in the 'free' extracellular space degrade, by the action of their neutral proteases, the apolipoprotein B component of the bound LDL. The proteolytic degradation of the granule-bound LDL results in its modification such that large fused LDL particles are formed on the granule surface. Phagocytosis, by macrophages, of the granules containing fused LDL particles leads to lysosomal degradation of LDL and cholesterol accumulation in macrophages as non-membrane-bound cholesteryl ester droplets, typical of foam cells. In contrast, the rapid internalization of the LDL-bearing, mast-cell-associated granules by recovering mast cells is not followed by lysosomal processing of LDL. Instead, it leads to cholesterol accumulation in mast cells, in the form of large, partially degraded, modified LDL particles, in the granule compartment.