Efflux of chemotherapy drugs by P-glycoprotein (P-gp) at the plasma membrane is thought to be a major cause of cancer multidrug resistance. In this report, we show by flow cytometry that P-gp also concentrates large amounts of 2 different drugs, Hoechst 33342 and daunorubicin, within a cytoplasmic compartment of multidrug resistant CHRC5 cells. A quantitative assay of Hoechst 33342 revealed that cytoplasmic sequestration by P-gp in CHRC5 cells accounted for about half of the amount of Hoechst 33342 accumulated by the drug-sensitive parental Aux BI cells. Daunorubicin sequestered in the cytoplasm of CHRC5 cells could be released by inhibiting P-gp function with cyclosporin A, resulting in cell death. A likely site of drug sequestration is P-gp-containing cytoplasmic vesicles, in which the P-gp is oriented so that drugs are transported and concentrated in the interior of the vesicles. P-gp was detected in the membranes of cytoplasmic vesicles of CHRC5 cells by confocal immunofluorescence microscopy and immunoelectron microscopy with anti-P-gp monoclonal antibodies (MAbs). Vesicular localization of daunorubicin was observed by epifluorescence microscopy. The origin and nature of the P-gp-containing vesicles are unknown, but they do not correspond to endocytic vesicles. Our results directly demonstrate that chemosensitizer-induced release of drugs sequestered in cytoplasmic vesicles by P-gp can be used to overcome multidrug resistance.