Phospholipid vesicles or liposomes encapsulating purified and concentrated human hemoglobin (Hb-vesicle, HbV) have been developed as a transfusion alternative. They are void of blood-type antigens and infectious viruses; they are stable and suitable for long-term storage. The cellular structure of HbV (particle diameter, ca. 250 nm) prevents direct contact of Hb with the blood components and the endothelial lining shielding cells from the side effects of Hb molecules. Microcirculatory observations show that the cellular structure of HbV is important to control reactions with endothelium-derived vasorelaxation factors. Animal studies of extreme hemodilution and resuscitation from hemorrhagic shock attest to the sufficient oxygen transporting capacity of HbV. Studies of biodistribution and metabolism reveal that HbVs are captured eventually in the reticuloendothelial system, and degraded within one week. In a joint collaboration partnership of academia, a biotech venture company and a corporation, we plan to produce HbV with good manufacturing practices, and to start preclinical and, finally, clinical trials within a few years.