1. The phosphatidylinositol-exchange protein from bovine brain was used to determine to what extent phosphatidylinositol in rat liver microsomal membranes is available for transfer. 2. The microsomal membranes used in the transfer reaction contained either phosphatidyl[2-(3)H]inositol or (32)P-labelled phospholipid. The (32)P-labelled microsomal membranes were isolated from rat liver after an intraperitoneal injection of [(32)P]P(i). The (3)H-labelled microsomal membranes and rough- and smooth-endoplasmic-reticulum membranes were prepared in vitro by the incorporation of myo-[2-(3)H]inositol into phosphatidylinositol by either exchange in the presence of Mn(2+) or biosynthesis de novo in the presence of CTP and Mg(2+). 3. Tryptic or chymotryptic treatment of the microsomes impaired the biosynthesis de novo of phosphatidylinositol. It was therefore concluded that the biosynthesis of phosphatidylinositol and/or its immediate precursor CDP-diacylglycerol takes place on the cytoplasmic surface of the microsomal membrane. 4. Under the conditions of incubation 42% of the microsomal phosphatidyl[2-(3)H]inositol was transferred with an estimated half-life of 5min; 38% was transferred with an estimated half-life of about 1h; the remaining 20% was not transferable. Identical results were obtained irrespective of the method of myo-[2-(3)H]inositol incorporation. 5. Both measurement of phosphatidylinositol phosphorus in the microsomes after transfer and the transfer of microsomal [(32)P]phosphatidylinositol indicate that phosphatidyl[2-(3)H]-inositol formed by exchange or biosynthesis de novo was homogeneously distributed throughout the microsomal phosphatidylinositol. 6. We present evidence that the slowly transferable pool of phosphatidylinositol does not represent the luminal side of the microsomal membrane; hence we suggest that this phosphatidylinositol is bound to membrane proteins.