The endocytosis of large unilamellar liposomes composed of phosphatidylcholine by the cultured Chinese hamster V-79 cells is demonstrated with electron microscopy cytochemistry. A novel cytochemical marker, 5-Br,4-Cl,3-indolylphosphate (BCIP) is used. This marker is a soluble and colorless substrate for the lysosomal acid phosphatase and can be readily entrapped in liposomes. The product of the enzymatic reaction, 5-Br,4-Cl,3-hydroxy indole, rapidly self-condenses and becomes an insoluble derivative of indigo blue. In thin section transmission electron microscopy, the condensed product appears as electron-dense deposits in the lysosomes. Since the electron-dense deposit only appears when the endocytosed liposomes are delivered to the lysosomes as the result of phagosome-lysosome fusion, this marker provides a unique cytochemical means to reveal those liposomes that are lysosomotropic and are actually decomposed within the lysosomes. No electron-dense deposits are found in the liposome-treated cells in the presence of chloroquine, or a combination of NaN3 and deoxyglucose. As a comparison, we have also used horseradish peroxidase entrapped in liposomes to confirm the endocytic uptake of liposomes. Using a radioactive marker, 125I-labeled lysozyme, entrapped in liposomes, it is shown that about 20-30% of liposome uptake by V-79 cells is due to endocytosis.