The Neo Red Cells (NRCs), a new type of artificial oxygen carriers have been developed and investigated for oxygen transport capacity, hemodynamics and safety in experimental animals. Stroma free hemoglobin (Hb) prepared from outdated human red blood cells was encapsulated together with inositol hexaphosphate (as an allosteric effector), coenzyme and substrates for reducing metHb back to Hb in liposomes under an aseptic condition. The NRCs were subsequently coated with polyethylene glycol bound to phosphatidylethanolamine as surface modifier to prevent aggregation of NRCs in plasma. The metHb formation was reduced from 1%/hr to 0.37%/hr by the addition of metHb reduction system. The blood pressure increased transiently during injection, and then immediately returned to pre-injection levels. The efficiency of the NRCs in tissue oxygenation and recovery from anemia was studied in rabbits which had been made severely anemic by drawing 85% of their blood and replacing it with NRCs. All of the animals infused with NRCs recovered to pre-anemic conditions within 6-8 hr and survived until they were sacrificed, 6 months after the exchange transfusion. Our observations suggest that the NRCs are pathogen free, efficient oxygen carriers without causing serious adverse reactions, with controllable metHb formation in vivo and during storage.