A possible mechanism for the formation of smooth muscle foam cells in the atherosclerotic lesion was explored. Cultured macrophages (J774 cell line) were induced to form cytoplasmic cholesteryl ester inclusions by exposure to acetylated low density lipoprotein in the presence of cholesterol-rich phospholipid dispersions. The macrophages were disrupted by brief sonication, and the inclusions were isolated by flotation. When these inclusions were placed in direct contact with cultured smooth muscle cells, cellular uptake of the inclusions in a time- and dose-dependent manner was observed. Light and electron microscopy indicated the presence of lipid inclusions throughout the cytoplasm of the cells. Uptake of inclusion lipid by the smooth muscle cells was inhibited by several metabolic inhibitors, indicating that the process is dependent on metabolic activity. A modest but significant hydrolysis of the cholesteryl ester was observed, showing that the stored cholesteryl esters are metabolically available.