We investigated the intracellular metabolic fate of [Me-14C]choline-labeled phosphatidylcholines and sphingomyelin taken up by rat Kupffer cells in maintenance culture during interaction with large unilamellar liposomes composed of cholesterol, labeled choline-phospholipid and phosphatidylserine (molar ration 5:4:1). With both labeled compounds only small proportions of water-soluble radioactivity were found to accumulate in the cells and in the culture medium, suggesting limited phospholipid degradation. However, after a lag period of 30 min progressively increasing proportions of cell-associated liposomal phospholipid were found to be converted to cellular phospholipid, nearly all of which was phosphatidylcholine. This conversion as well as the limited release of water-soluble label from the cells was inhibited by the lysosomotropic agents ammonium chloride and chloroquine. With [Me-14C]choline-labeled lysophosphatidylcholine, label was found to become cell-associated far in excess of an encapsulated liposomal label, [3H]inulin. Without a lag period virtually all of this was rapidly converted to phosphatidylcholine, a process which was not inhibited by the lysosomotropic agents. It is concluded that Kupffer cells, after endocytosis of liposomes, degrade the liposomal phospholipids effectively but reutilize the choline moiety for de novo synthesis of cellular phosphatidylcholine.