Folic acid was covalently conjugated to 66-nm liposomes via spacers of various lengths in an attempt to target the liposomes to KB cells expressing folate receptors. Spacers of short and intermediate lengths were unable to mediate association of folate-conjugated liposomes with receptor-bearing cells, however, use of a 250 A polyethyleneglycol spacer (PEG, M(r) approximately 3350) permitted avid uptake of the liposomes at approximately 2.5 x 10(5) sites/cell. The binding of folate-PEG liposomes to KB cells could be competitively inhibited by excess free folate or by antiserum against the folate receptor, demonstrating the interaction is mediated by the cell surface folate-binding protein. Following binding, cell-associated folate-PEG liposomes were internalized by folate-receptor-mediated endocytosis at 37 degrees C but not at 4 degrees C. These folate-PEG liposomes show potential for delivering large quantities of low molecular weight compounds nondestructively into folate receptor-bearing cells.