Lipopolysaccharide binding protein (LBP) is a plasma protein known to facilitate the diffusion of bacterial LPS (endotoxin). LBP catalyzes movement of LPS monomers from LPS aggregates to HDL particles, to phospholipid bilayers, and to a binding site on a second plasma protein, soluble CD14 (sCD14). sCD14 can hasten transfer by receiving an LPS monomer from an LPS aggregate, and then surrendering it to an HDL particle, thus acting as a soluble "shuttle" for an insoluble lipid. Here we show that LBP and sCD14 shuttle not only LPS, but also phospholipids. Phosphatidylinositol (PI), phosphatidylcholine, and a fluorescently labeled derivative of phosphatidylethanolamine (R-PE) are each transferred by LBP from membranes to HDL particles. The transfer could be observed using recombinant LBP and sCD14 or whole human plasma, and the plasma-mediated transfer of PI could be blocked by anti-LBP and partially inhibited by anti-CD14. sCD14 appears to act as a soluble shuttle for phospholipids since direct binding of PI and R-PE to sCD14 was observed and because addition of sCD14 accelerated transfer of these lipids. These studies define a new function for LBP and sCD14 and describe a novel mechanism for the transfer of phospholipids in blood. In further studies, we show evidence suggesting that LBP transfers LPS and phospholipids by reciprocal exchange: LBP-catalyzed binding of R-PE to LPS x sCD14 complexes was accompanied by the exit of LPS from sCD14, and LBP-catalyzed binding of R-PE to sCD14 was accelerated by prior binding of LPS to sCD14. Binding of one lipid is thus functionally coupled with the release of a second. These results suggest that LBP acts as a lipid exchange protein.