Haemoglobin (Hb) was encapsulated into liposomes as a blood substitute by a freeze-thaw method. The encapsulation efficiency was affected by the Hb/lipid ratio, starting Hb concentration, pH and salt concentration. Liposome-encapsulated haemoglobin (LEH) prepared by this method contains 5-10 mM Hb with 4-10 per cent methaemoglobin (Met-Hb), depending on the starting Hb/lipid ratio and Met-Hb content. The encapsulated Hb has the same absorption spectrum as free Hb and shows oxygen-dissociation characteristics similar to normal red blood cells when 2,3-diphosphoglycerate is co-entrapped in the liposomes. LEH exhibited some leakage, which was greatly reduced by sequential extrusions of LEH through polycarbonate membranes (1.0 and 0.45 mum). Stability of LEH was studied using different Hb preparations, and antioxidants of lipids or/and Hb either at 4 or 37-degrees-C. Alpha-tocopherol or butylated hydroxytoluene, antioxidants of lipids, inhibited not only the peroxidation of liposomes but also Hb oxidation. Among antioxidants of Hb, NADH was most effective in preventing the oxidation of Hb. Glutathione had a moderate preventive effect. However, catalase had no effect and ascorbate accelerated the oxidation of Hb. Glucose and glutathione decreased the oxidation of Hb only in the Hb preparation obtained by hypotonic lysing, not in that by toluene lysing. These results indicate that the Met-Hb reductase system in the latter is lost or inactivated during isolation.