Purified mannitol Enzyme II from Escherichia coli was reconstituted in phospholipid vesicles employing the octylglucoside dilution procedure and was shown to catalyze vectorial mannitol 1-phosphate:mannitol transphosphorylation. Reconstitution of the enzyme into liposomes showed a marked dependency upon the octylglucoside concentration with an optimum at 1.2%. The reconstituted transphosphorylation activity exhibited an absolute dependence upon mannitol 1-phosphate as the phosphoryl donor, was sensitive to N-ethylmaleimide, and had a pH optimum near 6. The intravesicular radiolabeled mannitol phosphate could be released from the proteoliposomes by the addition of either 50 microM unlabeled mannitol or 0.5% sodium dodecyl sulfate. The rate of formation of intraliposomal mannitol phosphate, measured as a function of the mannitol Enzyme II concentration, showed a sigmoidal response, suggesting that at high enzyme concentrations the mannitol Enzyme II exists in an aggregated or oligomeric state and that this form is more active than the monomeric or dissociated form of the enzyme in catalyzing the vectorial mannitol transphosphorylation reaction.