We have investigated the processing of the non-exchangeable fluorescent phospholipid analogue phosphatidyl(N-sulphorhodamine B sulphonyl)ethanolamine (N-Rh-PE) by rat liver cells. In the hepatocyte couplet system, N-Rh-PE was incorporated into the plasma membrane at 2 degrees C and readily internalized upon warming to 37 degrees C. Fluorescence was initially found to be concentrated in vesicles clustered throughout the cell, but subsequently it started to accumulate in pericanalicular vesicles, tentatively identified as lysosomes, and in the bile canalicular lumen. Analysis of cells and media by t.l.c. revealed the slow formation of at least two metabolites. After intravenous injection into bile-fistula rats of [9,10-3H-oleoyl]N-Rh-PE incorporated in small unilamellar liposomes, the initial rates of elimination from plasma of 3H and rhodamine label were virtually identical. However, biliary secretion of the 3H label (5.5% of dose at 2 h) was much slower than that of the rhodamine label (49.3% at 2 h). The rhodamine label in bile was chloroform-soluble, but not identical to the native molecule, and was resistant to phospholipase A2 and alkaline hydrolysis. To gain insight in the mechanism of the rapid bile secretion of this metabolite, we compared the processing of N-Rh-PE, its deacylated form [glycerophospho(N-sulphorhodamine B sulphonyl)ethanolamine; Gly-N-Rh] and the rhodamine label itself (sulphorhodamine B sulphonyl chloride; SRho). Intravenous injection of chloroform-soluble N-Rh-PE and of methanol/water-soluble Gly-N-Rh complexed with albumin both resulted in rapid bile secretion of chloroform-soluble fluorescent compounds (60.2% and 86.3% respectively at 2 h), which showed behaviour identical to that of the metabolite of liposomal N-Rh-PE on t.l.c. Methanol/water-soluble SRho was also rapidly secreted into bile (89.5% at 2 h) without being metabolized. Bile secretion of the chloroform-soluble metabolite of N-Rh-PE and of SRho was markedly impaired (-31% and -52% respectively) in GY Wistar rats, which express a genetic defect in the hepatobiliary transport of organic anions. Our data show that the rat hepatocyte is capable of modifying the structure of N-Rh-PE, a process which proceeds considerably faster in vivo than in vitro. The chloroform-soluble metabolite is subsequently rapidly removed via the bile. The canalicular organic anion transporting system, which is deficient in GY rats, appears to be involved in the excretion of this apolar product of hepatic metabolism.