The purpose of this study was to evaluate the effects of liposome encapsulated hemoglobin named "Neo Red Cells (NRC)" on canine hemorrhagic shock model and its safety for the vital organs in a whole blood exchange model. HEMORRHAGIC SHOCK: Nine adult mongrel dogs were used. Under mechanical ventilation inhaling room air, blood was withdrawn via an artery at a rate of 40 ml/min in order to induce hemorrhagic shock (systolic pressure below 60 mm Hg) and then NRC was transfused. For each animal, three to five cycles of bloodletting and NRC transfusion were performed. After blood exchange, total peripheral resistance index (TPRI) decreased and cardiac index (CI) increased. These changes were more marked in the high exchange group (exchange rate over 88%; five animals) than in the low exchange group (less than 88%; four animals), indicating that the low viscosity NRC reduced the load on the circulatory system. The A-V difference in oxygen content per lg hemoglobin was greater after blood exchange, indicating that oxygen binding capacity of NRC is higher than that of red blood cells. WHOLE BLOOD EXCHANGE: Five beagles were used for the blood exchange. The blood was withdrawn from an artery at a rate of 15 ml/min and NRC was infused at the same time. A dog whose blood was exchanged with hydroxyethylstarch instead of NRC died within 15 hours after blood exchange. Three dogs whose blood was exchanged with NRC (exchange rate was from 82 to 90%) have been living over a year without any side effects. A dog sacrificed on the 15th postoperative day for autopsy, microscopically showed no side effects in vital organs. We conclude that NRC is more suitable than natural blood for treatment of hemorrhagic shock and safe for vital organs.