Methoxy(polyethylene glycol), mPEG, -grafted liposomes are known to exhibit prolonged circulation time in the blood, but their infusion into a substantial percentage of human subjects triggers immediate non-IgE-mediated hypersensitivity reactions. These reactions are strongly believed to arise from anaphylatoxin production through complement activation. Despite the general view that vesicle surface camouflaging with mPEG should dramatically suppress complement activation, here we show that bilayer enrichment of noncomplement activating liposomes [dipalmitoylphosphatidylcholine (DPPC) vesicles] with phospholipid-mPEG conjugate induces complement activation resulting in vesicle recognition by macrophage complement receptors. The extent of vesicle uptake, however, is dependent on surface mPEG density. We have delineated the likely structural features of phospholipid-mPEG conjugate responsible for PEGylated liposome-induced complement activation in normal as well as C1q-deficient human sera, using DPPC vesicles bearing the classical as well as newly synthesized lipid-mPEG conjugates. With PEGylated DPPC vesicles, the net anionic charge on the phosphate moiety of phospholipid-mPEG conjugate played a key role in activation of both classical and alternative pathways of complement and anaphylatoxin production (reflected in significant rises in SC5b-9, C4d, and C3a-desarg levels in normal human sera as well as SC5b-9 in EGTA-chelated/Mg2+ supplemented serum), since methylation of the phosphate oxygen of phospholipid-mPEG conjugate, and hence the removal of the negative charge, totally prevented complement activation. To further corroborate on the role of the negative charge in complement activation, vesicles bearing anionic phospholipid-mPEG conjugates, but not the methylated phospholipid-mPEG, were shown to significantly decrease serum hemolytic activity and increase plasma thromboxane B2 levels in rats. In contrast to liposomes, phospholipid-mPEG micelles had no effect on complement activation, thus suggesting a possible role for vesicular zwitterionic phospholipid head-groups as an additional factor contributing to PEGylated liposome-mediated complement activation. Our findings provide a rational conceptual basis for development of safer vesicles for site-specific drug delivery and controlled release at pathological sites.