Small unilamellar vesicles consisting of sphingomyelin, cholesterol and phosphatidylserine in a molar ratio of 4:5:1 containing [3H]inulin as a marker of the aqueous space or [Me-14C]choline-labeled sphingomyelin as a marker of the lipid phase were injected intravenously into rats. After separation of the non-parenchymal cells into a Kupffer cell fraction and an endothelial cell fraction by elutriation centrifugation analysis of the radioactivity contents demonstrated that Kupffer cells were actively involved in the uptake of the vesicles whereas endothelial cells did not contribute at all. Uptake by total parenchymal cells was also substantial but, on a per cell base, significantly lower than that by the Kupffer cells. By comparising the fate of the [3H]inulin label and the [14C]sphingomyelin label it was concluded that release of liposomal lipid degradation products especially occurred from Kupffer cells rather than from parenchymal cells. In both cell types, however, substantial proportions of the 14C-label accumulated in the phosphatidylcholine fraction, indicating intracellular degradation of sphingomyelin and subsequent phosphatidylcholine synthesis. Treatment of the animals with the lysosomotropic agent chloroquine prior to liposome injection effectively blocked the conversion of the choline-labeled sphingomyelin into phosphatidylcholine in both cell types. This observation indicates that uptake of the vesicles occurred by way of an endocytic mechanism.