A preparation of cyclosporine (CsA) in liposomes was tested in the rat to evaluate its effectiveness in reducing CsA nephrotoxicity. The drug was injected intravenously in unilaterally nephrectomized Lewis rats at a daily dose of 25 mg/kg for 14 days, either in a cremophore solution (eight rats) or in a preparation of liposomes (eight rats). Another group of four animals received the cremophore solution alone. Overall, rats treated with the CsA-liposome preparation had reduced toxicity, exhibiting better survival rates and less weight loss than those treated with the CsA-cremophore. Incorporating CsA into liposomes induced a statistically significant (p less than 0.05) reduction in the otherwise progressive increase of serum creatinine during week 2 of the experiment. Following administration of CsA-liposome preparation, epithelial cells of the proximal renal tubules appeared morphologically normal, without evidence of vacuolization, which is characteristic of CsA nephrotoxicity and was seen in the CsA-cremophore group. Although the exact mechanism is not clearly understood, it is likely that the tissue distribution of CsA, when incorporated into liposomes, is modified in favour of the reticuloendothelial cells, thereby sparing highly sensitive, but non-target organs such as the kidneys.