Proliferation of lipolysosomes is one of the characteristic aspects of embryonic chick hepatocytes. Formation of lipolysosomes is observed in the well-developed trans-Golgi network, with the highest frequency occurring from 11 to 14 days of incubation. The lipolysosomes usually contain a small and electron-dense lipid inclusion; however, during development, they gradually enlarge with an accompanying reduction in the electron density of the inclusion. Lipolysosomes isolated from neonatal chick liver homogenates were mainly composed of esterified cholesterol and showed considerably high activity of lysosomal enzymes. Moreover, the lipolysosome fraction is clearly shown to be a function of intralysosomal lipolysis via acid lipase. This accumulation of esterified cholesterol within lipolysosomes might be attributed to an excessive uptake and conversion of plasma lipoproteins to lipolysosomes. This concept is supported by the appearance of an abundance of coated pits and both “early” and “late” endosomes. The major components of plasma lipoprotein are low density lipoprotein (LDL) and high density lipoprotein (HDL), the cholesterol-rich lipoproteins, whose cholesterol content increases during the last week of incubation when the lipolysosomes quickly enlarge. Plasma lipoprotein particles are produced in the yolk sac epithelium from yolk very low density lipoprotein (VLDL) and transferred via the vitelline circulation to the chick liver. After hatching, when the supply of nutrients from the yolk sac is terminated, lipolysosomes immediately decrease in size and number. The cholesterol and fatty acids released are useful as an energy source and lipid metabolism in general, especially after hatching. Food intake induces the use of and accelerates the disappearance of lipolysosomes. Instead of lipolysosomes, lipid droplets appear and increase in number and size with concomitant increases of triglyceride concentrations in the liver homogenates, suggesting that lipogenesis has begun in the chick hepatocyte. Microsc. Res. Tech. 39:444–452, 1997. © 1997 Wiley-Liss, Inc.