We describe an assay for following the mixing of aqueous contents during fusion of phospholipid vesicles. Terbium is encapsulated as the Tb(citrate)3(6-) chelation complex in one population of vesicles, dipicolinic acid (DPA) in another. Vesicle fusion results in the formation of the fluorescent Tb(DPA)3(3-) chelation complex. The presence of EDTA (0.1 mM) and Ca2+ (greater than 1 mM) prevents the formation of the Tb/DPA complex in the external medium. We have studied the Ca2+-induced fusion of small or large unilamellar vesicles (SUV or LUV, respectively) composed of phosphatidylserine (PS). In addition, vesicle aggregation was monitored by light scattering, and release of vesicle contents was followed by carboxyfluorescein (CF) fluorescence enhancement. The addition of Ca2+ induced an immediate enhancement in Tb fluorescence with both SUV and LUV, which occurs on the same time scale as aggregation but much faster than the release of CF. The release of contents from LUV occurs with a considerable delay. It is estimated that the initial fusion of SUV is accompanied by 10% leakage of the internal volume per fusion event; in contrast, fusion of LUV is essentially nonleaky. Massive release of vesicle contents appears to be a secondary phenomenon related to the collapse of fused vesicles. The initial rate and the extent of Tb fluorescence enhancement are markedly dependent on the Ca2+ concentration. Threshold Ca2+ concentrations are 1.2 and 2.4 mM for SUV nd LUV, respectively. At saturating Ca2+ concentrations (greater than 10 mM), the rate of fusion of LUV is slightly lower than that of SUV at the same vesicle concentration. At any Ca2+ concentration, the rates of both SUV and LUV fusion are consistent with vesicle aggregation being rate limiting. When measured at a subsaturating Ca2+ concentration, fusion is essentially second order over a wide range of relatively low vesicle concentrations, whereas at higher vesicle concentrations the order is decreased. This suggests that at high vesicle concentrations (and at relatively low Ca2+ concentrations) aggregation may proceed faster than fusion.