DNA, isolated from Simian virus 40 (SV40), has been encapsulated in large (0.4-micrometer diameter) unilamellar phospholipid vesicles. The procedure used for liposome preparation encapsulated the SV40 DNA at high efficiency (30 to 50% entrapment) and did not alter the physical or biological properties of the DNA molecules. The biological activity of the liposome-entrapped viral DNA was determined by plaque assays on a permissive monkey cell line. The infectivity of liposome-entrapped SV40 DNA was enhanced at least 100-fold over that of free naked DNA. Importantly, the infectivity of vesicle-entrapped DNA was resistant to DNase digestion, dependent on the amount of DNA encapsulated per vesicle and on the vesicle lipid composition. Liposomes composed of phosphatidylserine were the most efficient for delivery of DNA to cells (1.8 x 10(3) plaque-forming units/micrograms of DNA). Following the incubation of DNA-containing liposomes with cells, their infectivity could be enhanced an additional 10- to 200-fold by exposing the cells to high concentrations of polyethylene glycol or glycerol. Under these conditions the infectivity of liposome-encapsulated SV40 DNA (3 x 10(5) plaque-forming units/microgram) was comparable with values reported using the calcium phosphate method. In addition to providing a sensitive assay for monitoring and optimizing the delivery of vesicle contents to cells, the liposome-mediated delivery of nucleic acids may have potential for increasing the efficiency of DNA delivery to cells and for extending the number of cell types which can be transformed or transfected.