The passage of pulse doses of asialoglycoproteins through the endosomal compartments of rat liver hepatocytes was studied by subcellular fractionation and EM. The kinetics of disappearance of radiolabeled asialofetuin from light endosomes prepared on Ficoll gradients were the same as the kinetics of disappearance of asialoorosomucoid-horse radish peroxidase reaction products from intracellular membrane-bound structures in the blood sinusoidal regions of hepatocytes. The light endosomes were therefore identifiable as being derived from the peripheral early endosome compartment. In contrast, the labeling of dense endosomes from the middle of the Ficoll gradient correlated with EM showing large numbers of reaction product-containing structures in the nonsinusoidal parts of the hepatocyte. In cell-free, postmitochondrial supernatants, we have previously observed that dense endosomes, but not light endosomes, interact with lysosomes. Cell-free interaction between isolated dense endosomes and lysosomes has now been reconstituted and analyzed in three ways: by transfer of radiolabeled ligand from endosomal to lysosomal densities, by a fluorescence dequenching assay which can indicate membrane fusion, and by measurement of content mixing. Maximum transfer of radiolabel to lysosomal densities required ATP and GTP plus cytosolic components, including N-ethylmaleimide-sensitive factor(s). Dense endosomes incubated in the absence of added lysosomes did not mature into vesicles of lysosomal density. Content mixing, and hence fusion, between endosomes and lysosomes was maximal in the presence of cytosol and ATP and also showed inhibition by N-ethyl-maleimide. Thus, we have demonstrated that a fusion step is involved in the transfer of radiolabeled ligand from an isolated endosome fraction derived from the nonsinusoidal regions of the hepatocyte to preexisting lysosomes in a cell-free system.