In this paper it is demonstrated that reconstituted influenza virus envelopes (virosomes) fuse efficiently with membranes of the endosomal cell compartment of cultured cells, after internalization through receptor-mediated endocytosis. As a consequence, molecules, encapsulated in the virosomal interior, are transferred to the cell cytoplasm. This process was monitored on the basis of delivery of subunit A of diphtheria toxin (DTA), initially encapsulated in the virosomal lumen. Virosome-mediated cytoplasmic delivery of DTA resulted in a virtually complete inhibition of cellular protein synthesis. DTA delivery was blocked by factors inhibiting the pH-dependent fusion activity of viral hemagglutinin, i.e., 20 mM NH4Cl, preincubation of the virosomes at low pH, and anti-hemagglutinin antibodies. Quantitation of the extent of virosome-mediated delivery of biologically active DTA demonstrated that a lower bound of approximately 10% of the virosomes entering the cells deposited their aqueous contents into the cytosol. This is in good agreement with the final extent of virosome fusion of 40%, as determined by a fluorescence lipid mixing assay based on the dilution of pyrene-labeled phosphatidylcholine from the virosomal into the endosomal membrane. At an added concentration of 1 mu M virosomal lipid per 50 000 cells, depending on the condition of the experiment, a minimum of 4000 virosomes per cell were found to be internalized. Virosomes could also be induced to fuse with the cell plasma membrane by a transient lowering of the extracellular pH, as detected by appearance of virosome-encapsulated DTA in the cytoplasm. The results demonstrate that virosome-mediated delivery of polypeptide toxin molecules can be used as a sensitive means to study the interactions of enveloped viruses with host cells. In addition, virosomes may be used as versatile vehicles for the delivery of water-soluble molecules to the cytoplasm of cultured cells.