Cholesteryl ester-loaded macrophages, or foam cells, are a prominent feature of atherosclerotic lesions. Low density lipoprotein (LDL) receptor-mediated endocytosis of native LDL is a relatively poor inducer of macrophage cholesteryl ester accumulation. However, the data herein show that in the presence of a very small amount of sphingomyelinase, LDL receptor-mediated endocytosis of 125I-LDL was enhanced and led to a 2-6-fold increase in 125I-LDL degradation and up to a 10-fold increase in cholesteryl ester accumulation in macrophages. The enhanced lipoprotein uptake and cholesterol esterification was seen after only approximately 12% hydrolysis of LDL phospholipids, was specific for sphingomyelin hydrolysis, and appeared to be related to the formation of fused or aggregated spherical particles up to 100 nm in diameter. Sphingomyelinase-treated LDL was bound by the macrophage LDL receptor. However, when unlabeled acetyl-LDL, a scavenger receptor ligand, was present during or after sphingomyelinase treatment of 125I-LDL, 125I-LDL binding and degradation were enhanced further through the formation of LDL-acetyl-LDL mixed aggregates. Experiments with cytochalasin D suggested that endocytosis, not phagocytosis, was involved in internalization of sphingomyelinase-treated LDL. Nonetheless, the sphingomyelinase effect on LDL uptake was macrophage-specific. These data illustrate that LDL receptor-mediated endocytosis of fused LDL particles can lead to foam cell formation in cultured macrophages. Furthermore, since both LDL and sphingomyelinase are present in atherosclerotic lesions and since some lesion LDL probably is fused or aggregated, there is a possibility that sphingomyelinase-treated LDL is a physiologically important atherogenic lipoprotein.