The impact of a peptide that contains a nuclear localisation sequence (NLS) on intracellular DNA trafficking was studied. We used the adenoviral core peptide mu and an SV40 NLS peptide to condense plasmid DNA (pDNA) prior to formulation with 3beta-[N-(N', N'-dimethylaminoethane)carbamoyl]cholesterol/dioleoyl-L-alpha-phosphatidyl ethanolamine (DC-Chol/DOPE) liposomes to give LMD and LND vectors, respectively. Fluorescent-labelled lipid and peptides plus dye-labelled pDNA components were used to investigate gene delivery in dividing and S-phase growth-arrested cells. Confocal microscopic analyses reveal little difference in intracellular trafficking events. Strikingly, mu peptide associates with nuclei and nucleoli of cells within less than 15 mins incubation of LMD with cells, which suggests that mu peptide has an NLS function. These NLS properties were confirmed by cloning of a mu-beta-galactosidase fusion protein that localises in the nuclei of cells after cytosolic translation. In dividing cells both LMD and LND deliver pDNA(Cy3) to nuclei within 30-45 min incubation with cells. By contrast, pDNA is detected only in the cytoplasm in growth-arrested cells over the period of time investigated, and not in the nuclei. LD systems prepared from DC-Chol/DOPE cationic liposomes and pDNA(Cy3) behave similarly to LMD systems, which suggests that mu peptide is unable to influence trafficking events in this current LMD formulation, in spite of its strong NLS capacity. We further describe the effect of polyethyleneglycol (PEG) on cellular uptake. "Stealth" systems obtained by post-coating LMD particles with fluorescent-labelled PEG molecules (0.5, 5 and 10 mol % fluorescein-PEG(5000)-N-hydroxysuccinimide) were prepared and shown to be internalised rapidly (mins) by cells, without detectable transgene expression. This result indicates that PEG blocks intracellular trafficking of pDNA.