Liposomes have the well-known ability to channel protein and peptide antigens into the MHC class II pathway of phagocytic antigen-presenting cells (APCs) and thereby enhance the induction of antibodies and antigen-specific T cell proliferative responses. Liposomes also serve as an efficient delivery system for entry of exogenous protein and peptide antigens into the MHC class I pathway and thus are very efficient inducers of cytotoxic T cell responses. Soluble antigens that are rendered particulate by encapsulation in liposomes are localized both in vacuoles and in the cytoplasm of bone marrow-derived macrophages. Utilizing fluorophore-labeled proteins encapsulated in liposomes we have addressed the question of how liposomal antigens enter the MHC class I pathway. After phagocytosis of the liposomes, the fluorescent liposomal protein and liposomal lipids enter the cytoplasm where they are processed by the proteasome complex. The processed liposomal protein is then transported via the TAP complex into the endoplasmic reticulum and the Golgi complex. Both the liposomal lipids and the liposomal proteins appear to follow the same intracellular route and they are processed as a protein-lipid unit. In the absence of a protein antigen (empty liposomes), there is no organelle-specific localization of the liposomal lipids. In contrast, when a protein is encapsulated in these liposomes, the distribution of the liposomal lipids is dramatically affected and the liposomal lipids localize to the trans-Golgi area. Localization of the protein in the trans-Golgi area requires liposomal lipids. Similarly, for the localization of liposomal lipids in the trans-Golgi area, there is an obligatory requirement for protein. Therefore, the intracellular trafficking patterns of liposomal lipids and liposomal protein are reciprocally regulated. Presence of both liposomal lipids and liposomal protein in the trans-Golgi therefore facilitates the entry of liposomal antigens into the MHC class I pathway. It is also possible that liposomal lipids are presented to T cells via the recently described CD1 pathway for lipid antigens. Because liposome-formulated vaccines have the potential to stimulate antibody as well as cellular immune responses to protein and lipid components, this approach could prove to be extremely useful in designing vaccine strategies.