A novel method for the facile production of gas-containing liposomes with simultaneous drug encapsulation is described. Liposomes of phospholipid and cholesterol were prepared by conventional procedures of hydrating the lipid film, sonicating, freezing and thawing. A single, but critical modification of this procedure generates liposomes that contain gas (air, perfluorocarbon, argon); after sonication, the lipid is placed under pressure with the gas of interest. After equilibration, the sample is frozen. The pressure is then reduced to atmospheric and the suspension thawed. This procedure leads to entrapment of air in amounts up to 10% by volume by lipid dispersions at moderate (10mg/ml) concentrations of lipids. The amount of gas encapsulated increases with gas pressure and lipid concentration. Utilizing 0.32 M mannitol to provide an aqueous phase with physiological osmolarity, 1, 3, 6 or 9 atm of pressure was applied to 4 mg of lipid. This led to encapsulation of 10, 15, 20, and 30 l of gas in a total of 400 l of liposome dispersion (10mg lipids/ml), respectively. The mechanism for gas encapsulation presumably depends upon the fact that air (predominantly nitrogen and oxygen), like most solutes, dissolves poorly in ice and is excluded from the ice that forms during freezing. The excluded air then comes out of solution as air pockets that are stabilized in some form by a lipid coating. The presence of air in these preparations sensitizes them to ultrasound (1MHz, 8 W/cm 2 ,10 second) such that up to half of their aqueous contents (which could be a water soluble drug) can be released by short (10 s) applications of ultrasound. Both diagnostic and therapeutic applications of the method are conceivable.