This paper describes the preparation of giant unilamellar vesicles with reconstituted hamster P-glycoprotein (Pgp, ABCB1) for studying the transport activity of this efflux pump in individual liposomes using optical microscopy. Pgp, a member of ABC (ATP-binding cassette) transporter family, is known to contribute to the cellular multidrug resistance (MDR) against variety of drugs. The efficacy of many therapeutics is, thus, hampered by this efflux pump, leading to a high demand for simple and effective strategies to monitor the interactions of candidate drugs with this protein. Here, we applied small Pgp proteoliposomes to prepare giant Pgp-bearing liposomes via modified electroformation techniques. The presence of Pgp in the membrane of giant proteoliposomes was confirmed using immunohistochemistry. Assessment of Pgp ATPase activity suggested that this transporter retained its activity upon reconstitution into giant liposomes, with an ATPase specific activity of 439 ± 103 nmol/mg protein/min. For further confirmation, we assessed the transport activity of Pgp in these proteoliposomes by monitoring the translocation of rhodamine 123 (Rho123) across the membrane using confocal microscopy at various ATP concentrations (0-2 mM) and in the presence of Pgp inhibitors. Rate of change in Rho123 concentration inside the liposomal lumen was used to estimate the Rho123 transport rates (1/s) for various ATP concentrations, which were then applied to retrieve the Michaelis-Menten constant (Km) of ATP in Rho123 transport (0.42 ± 0.75 mM). Similarly, inhibitory effects of verapamil, colchicine, and cyclosporin A on Pgp were studied in this system and the IC50 values for these Pgp inhibitors were found 26.6 ± 6.1 μM, 94.6 ± 47.6 μM, and 0.21 ± 0.07 μM, respectively. We further analyzed the transport data using a kinetic model that enabled dissecting the passive diffusion of Rho123 from its Pgp-mediated transport across the membrane. Based on this model, the permeability coefficient of Rho123 across the liposomal membrane was approximately 1.25×10-7 cm/s. Comparing the membrane permeability in liposomes with and without Pgp revealed that the presence of this protein did not have a significant impact on membrane integrity and permeability. Furthermore, we used this model to obtain transport rate constants for the Pgp-mediated transport of Rho123 (m3/mol/s) at various ATP and inhibitor concentrations, which were then applied to estimate values of 0.53 ± 0.66 mM for Km of ATP and 25.2 ± 5.0 μM for verapamil IC50, 61.8 ± 34.8 μM for colchicine IC50, and 0.23 ± 0.09 μM for cyclosporin A IC50. The kinetic parameters obtained from the two analyses were comparable, suggesting a minimal contribution from the passive Rho123 diffusion across the membrane. This approach may, therefore, be applied for screening the transport activity of Pgp against potential drug candidates.