Measuring optical spectra of chromophore molecules entrapped in liposomes can lead to considerable distortion because of absorption flattening. This phenomenon is analyzed theoretically, and it is shown that the deviation from the Beer-Lambert law becomes larger as the molar absorptivity of the chromophore increases and as the number of entrapped molecules becomes larger. The theoretical equations are tested experimentally with intermediate-sized phospholipid vesicles containing entrapped cytochrome c. It is shown that considerable absorption flattening is observed with vesicles containing about 50 chromophore molecules. The equation given can be used to correct the spectrum.