The inclusion complex formation of intravenously administered hydroxypropyl-beta-cyclodextrin and beta-cyclodextrin with endogenous lipids was studied. We tested the hypothesis that complex formation of endogenous cholesterol with cyclodextrins in the bloodstream leads to extraction of cholesterol from the large lipoprotein particles. The relatively small cholesterol-cyclodextrin complexes then leave the bloodstream via capillary pores, and dissociation of the complex in the extravascular compartment finally causes redistribution of cholesterol from blood to tissue. This hypothesis is supported by the following experimental findings. Intravenous administration of cyclodextrins led to a transient decrease in plasma cholesterol levels in a dose-dependent manner, and in vitro cholesterol-cyclodextrin complexes passed dialysis membranes with a molecular weight cutoff of 6000-8000. Further, cyclodextrins increased protein binding of the steroidal drug spironolactone, probably through removal of cholesterol from plasma protein binding sites. Finally, extravascular redistribution was directly demonstrated in histological studies of the kidneys. Glomerular filtration of the cholesterol-cyclodextrin complex is followed by dissociation of the complex in the ultrafiltrate, resulting in cholesterol accumulation in the proximal tubule cells. The cholesterol-beta-cyclodextrin complex has a limited aqueous solubility. Crystallization of this complex in renal tissue might explain the nephrotoxicity of parenterally administered beta-cyclodextrin. The absence of such crystallization might explain the lower nephrotoxicity of hydroxypropyl-beta-cyclodextrin after intravenous administration.