Photodynamic efficacy of four tetrakis (methoxyethyl) porphycene (TMPn) derivatives encapsulated in liposomes, was studied in vitro and in vivo. Fluorescence and absorption measurements were used to determine aggregation in dipalmitoyl phosphatidylcholine (DPPC) liposomes; no spectral changes were found when dissolving in an organic solution or in an aqueous dispersion of DPPC liposomes. This indicates that the porphycenes were located in the lipophilic bilayer of the liposomes. Fluorescence quenching experiments with I- showed, specifically, that porphycenes located in the liposome bilayer at various depths, according to the hydrophilicity of the porphycene side chains. Dose-response relations were established: increasing porphycene concentration or light dose enhanced the damage proportionally. In cultured MDCK cells, photodynamic damage was in accordance with location: a porphycene 'buried' inside the bilayer did not cause damage to the cell culture. PDT efficacy was tested also in vivo by the damage to blood vessels of the chorioallantoic membrane (CAM) of the fertilized chick embryo. Unlike in the in vitro case, the porphycene 'buried' inside the bilayer did cause significant photodynamic damage in vivo. This difference suggests that in vitro photodynamic action follows contact-mediated sensitizer transfer to cell membranes from liposomes, which remain distinct from cells, whereas in vivo the photosensitizer is delivered to tissue via fusion of liposomes with endothelial cell membranes.