Synthetic erythrocytes have been formed by encapsulating concentrated hemoglobin solutions in microcapsules consisting of phospholipid-cholesterol mixtures. The microcapsules (hemosomes) are of the order of one micron in diameter or smaller, are osmometers, are somewhat sturdier than erythrocytes (RBC), and are stable upon freezing. They have essentially the same oxygen and carbon dioxide carrying capacity as RBC, and can be tailored to have the same electrokinetic properties. They appear to evoke no immune response in the rat. In experiments involving complete replacement of natural blood hemosomes appear to sustain life. Rats can live and breathe normally without signs of hypoxia or acidosis for extended periods of time after the hematocrit of natural RBC drops well below the critical level. Synthetic erythrocytes do not appear to cause disseminated coagulation, microembolism, or any observable changes in internal organs.