Phagocytes of the smooth dogfish (Mustelus canis) contain no endogenous peroxidase within their lysosomes and constitute models for cells genetically deficient in lysosomal enzymes such as myeloperoxidase. We have obtained uptake of over 50% of exogenous horseradish peroxidase, provided the enzyme is exhibited to cells after incorporation into liposomes coated with heat-aggregated (620, 10 min), isologous IgM. Trapping of horseradish peroxidase (EC 1.11.1.7) by liposomes was established by chromatographic resolution (Sephadex G-200; Sepharose 2B and 4B) of free enzyme from that associated with liposomes; liposome-associated horseradish peroxidase, together with trapped markers of the aqueous compartment (glucose, CrO4=), were excluded, and free enzyme and markers were retained. Enzyme and marker trapping was not electrostatic, varied with the molar ratio of charged membrane components, and was reversed by detergent lysis (Triton X-100) of liposomes. Uptake at 300 of aggregated IgM-coated liposomes containing trapped horseradish peroxidase exceeded that of free enzyme by 100-fold, and was more efficient than uptake of horseradish peroxidase presented in uncoated liposomes or in liposomes coated with native IgM. After phagocytosis, peroxidaserich liposomes were localized exclusively in lysosomes of the phagocytes by ultrastructural histochemistry; the enzyme displayed over 50% latency to osmotic lysis. This method may prove to be of general use in the provision of exogenous enzymes to phagocytic cells genetically deficient in lysosomal hydrolases.