An apparatus for rotary dialysis is introduced and described in detail. The component parts are inexpensive, widely available, and relatively easy to modify and assemble. The apparatus achieves increased mixing of the contents of dialysis bags by constant end-over-end rotation. This technique is particularly useful in systems where maximum contact is desired between substances which would tend to partition under standard dialysis conditions. We have applied rotary dialysis to two liposome production methods. These are (i) the calcium-EDTA-chelation method of Papahadjopoulos et al. (1), which produces large unilamellar liposomes from negatively charged phospholipids, and (ii) a procedure for the reconstituion of membrane proteins into liposomes with a large internal aqueous space, which we have developed using the calcium-EDTA-chelation technique as a point of departure. In both techniques, vesicle formation occurs when a calcium-phospholipid precipitate is dissolved by the addition of EDTA. Instead of adding a 150 m m EDTA solution directly, as described in the original method, we have used overnight rotary dialysis against buffer containing 10 m m EDTA at the vesicle formation stage. Materials are encapsulated within the aqueous interior of the vesicles at much higher efficiencies when rotary dialysis is used in either method, compared to efficiencies obtained with direct addition of EDTA (up to 37% of added material vs a maximum published efficiency of 10% for direct addition). Rotary dialysis also promotes the reconstitution of a higher proportion of the membrane proteins present in the dialysis mixture into the bilayer of large liposomes (79 vs 41.6%). It also affects the content of liposomes qualitatively, allowing better reconstitution of the Sendai virus F glycoprotein than does direct addition of EDTA. These effects may be due to the slow time course, the extensive mixing of components, and the low volume-to-phospholipid ratios maintained during vesicle formation.