The ability of trehalose and other sugars to maintain the integrity of large unilamellar vesicles subjected to dehydration and rehydration has been investigated. It is shown, employing freeze-fracture techniques, that large unilamellar vesicles prepared in the presence of trehalose at 125 mM or higher concentration do not exhibit significant structural changes during the dehydration-rehydration cycle. Further, up to 90% of entrapped 22Na or [3H]inulin is retained during this process. Other sugars also exhibited similar protective effects where trehalose was most effective, followed by sucrose, maltose, glucose and lactose. It is demonstrated that proton or Na+/K+ electrochemical gradients can be maintained during the dehydration-rehydration process, which can subsequently be used to drive the uptake of lipophilic cationic drugs such as adriamycin. The implications for long-term storage of liposomal systems for use in drug-delivery protocols are discussed.