There is increasing evidence that microglial activation is one of the major pathogenic factors for Alzheimer's disease (AD) and the inhibition of the inflammatory activation of the microglia thus appears to be neuroprotective and a potentially useful treatment for AD. Phospholipids such as phosphatidylserine (PS) and phosphatidylcholine (PC) have been reported to modulate the immune function of phagocytes. In addition, PS has been reported to be a nootropics that can be used as nonprescription memory or cognitive enhancers. We therefore evaluated the effects of liposomes, which comprise both PS and PC (PS/PC liposomes), on the microglial production of tumor necrosis factor-alpha (TNF-alpha), nitric oxide (NO), and superoxide (*O(2)-) induced by amyloid beta (Abeta) and interferon-gamma (IFN-gamma). Pretreatment of microglia with PS/PC liposomes considerably inhibited the TNF-alpha, NO and *O(2)- production induced by Abeta/IFN-gamma. These results suggest that PS/PC liposomes have both neuroprotective and antioxidative properties through the inhibition of microglial activation, thus supporting the nootropic and antidementia effect of PS.