. There is a need to stimulate hair growth for various conditions of alopecia. It is asserted that to achieve hair growth stimulation, biologically active compounds must be delivered inside hair follicle cells and, that the optimal way to identify active compounds and methods of their delivery is to use an in vitro system. Active compounds in principle could be also used to cause desired changes in hair color and appearance. It is stated that the applicants have developed a gel-supported three-dimensional histoculture system (Hoffman, R.M., Cancer Cells3, 86-92, 1991) that allows the intact growth and testing of all components of skin, including keratinocytes, dermal fibroblasts and hair-folliclecells, for a period of 10 days or more (Li, L., et al., Proc. Natl. Acad.Sci.-USA. 88, 1908-1912, 1991). Hair itself can grow from such skin cultures(Li, L., et al., manuscript in preparation). Liposomes (spherical phospholipid vesicles with bilayer membrane structure) are considered a convenient means for the intracellular delivery of different substances from low-molecular-weight drugs to DNA plasmids. It is proposed here, using the histoculture system and fluorescent-labeled compounds included into liposomes, to study liposome interactions with hair-follicle cells, to find the optimal compositions for cell binding, to include into liposomes of a given composition different low-molecular-weight and high-molecular-weight, water-soluble and water-insoluble compounds and to find the optimal conditions for the release of the liposomal content into hair-follicle cells. In Phase II, in vitrostudies with model compounds will be performed to determine their effects on human skin culture in order to develop a commercial system for intra-follicle delivery of substances influencing hair growth, color and appearance.