Encapsulation of hemoglobin within a liposome is one of the strategies in the development of artificial oxygen carriers. It maintains the oxygen transporting properties of hemoglobin and, at the same time, eliminates the side effects of cell free hemoglobin. Hemoglobin vesicles (HbV) are a type of liposome encapsulated hemoglobin. They have a particle size of approximately 250 nm, a hemoglobin concentration of 10 g/dl, and the oxygen affinity, P50, is regulated to 32 Torr. In this study the authors examined the oxygen transporting capability of HbV in vivo, by performing exchange transfusions in rats. Exchange transfusion (90% of the estimated circulatory volume) with HbV suspended in 5% albumin (containing 160 mEq/L, sodium and 107 mEq/L, chloride) was carried out in male Wistar rats. Mean arterial pressure and heart rate were monitored through the arterial catheter. Arterial blood samples for gas analyses were also obtained from the arterial catheter. Abdominal aortic blood flow was measured by an ultrasonic pulsed Doppler flowmeter as an indicator of cardiac output. The oxygen tension of blood withdrawn from the right atrium was measured as an indicator of mixed venous oxygen tension. These values were employed to calculate oxygen delivery and consumption. Renal cortical and skeletal muscle tissue oxygen tensions were monitored as indicators of tissue perfusion. Five percent albumin and washed rat red blood cells suspended in 5% albumin containing 10 g/dl of hemoglobin; were employed as controls. At the completion of a 90% exchange transfusion, renal cortical and skeletal muscle tissue oxygen tensions, along with oxygen delivery and consumption, were sustained almost equally well with the HbV suspension compared to the washed rat red blood cell suspension, but declined significantly with the albumin suspension. The results indicate that the oxygen transporting capability of HbV was almost equivalent to that of rat red blood cells.