The effect of a novel liposomal preparation containing a phospholipid conjugate of methotrexate (MTX-LIPO) upon macrophage mediator release was investigated in normal and arthritic rats ex vivo. Peritoneal macrophages isolated from MTX-LIPO-treated arthritic rats and stimulated with lipopolysaccharide produced significantly less tumor necrosis factor (TNF) and prostaglandin (PGE2) than did macrophages isolated from saline-treated controls. In the same experimental system, free methotrexate only inhibited prostaglandin release, but it was more potent than MTX-LIPO in this respect. Additional studies are presently underway to investigate the effect of MTX-LIPO and MTX treatment upon the lipopolysaccharide-induced rise in plasma levels of various proinflammatory mediators in vivo. Haematopoietic toxicity was demonstrated in blood isolated from rats treated with free MTX, and this was as characterized by a significant reduction in reticulocyte count compared with MTX-LIPO and saline-treated rats.