We have investigated the ability of liposome-bound encephalitogenic peptide to suppress experimental allergic encephalomyelitis (EAE) in the guinea pig. EAE was induced by challenge with the encephalitogenic peptide, residues 113-122 of human myelin basic protein (MBP) in complete Freund's adjuvant. The peptide was acylated with stearic acid in order to anchor it to the lipid bilayer. The liposomal-bound peptide effectively suppressed clinical signs of EAE at relatively low doses, when given subcutaneously or intraperitoneally without incomplete Freund's adjuvant, several days after challenge. In vitro proliferation of lymphocytes from treated, protected animals in response to the peptide was greatly decreased but that to the purified protein derivative of tuberculin antigen was not, indicating an antigen-specific effect. However, histological signs of EAE were not reduced. The free peptide in solution was somewhat less effective when given intraperitoneally but was as or nearly as effective as liposome-bound peptide when given subcutaneously. Binding to liposomes may decrease the rate of clearance or degradation of the peptide when given intraperitoneally.