Transfection of bovine smooth muscle cells with plasmid constructs containing the full coding sequence for endothelial NO synthase (NOS3) using liposome mediated gene transfer gave rise to cells that produced high levels of NO. Western analysis indicated that transfected cells were indeed expressing NOS3 protein, but in addition expression of inducible NO synthase (NOS2) was detected. The latter accounted for the high levels of NO produced by transfectants. Treatment of bovine or rat smooth muscle cells or 3T3 fibroblasts with only liposome preparations resulted in the induction of NOS2 expression and NO production. All liposomal reagents were shown to be endotoxin free. Direct induction of gene expression by liposomes alone suggests caution in interpretation of data for which gene transfer is mediated by liposomal preparations.