We fused P-glycoprotein with beta-galactosidase at the C-terminus aiming to study the mechanism of drug binding of P-glycoprotein in reconstitution experiments. Expression of the fusion protein in NIH 3T3 cells conferred a multidrug-resistant phenotype, suggesting that beta-galactosidase fusion at the C-terminus does not affect the functions of P-glycoprotein. The fusion protein was partially purified by simple immunoprecipitation with anti-beta-galactosidase polyclonal antibody, and its [3H]azidopine binding property was investigated in the presence of various compositions of liposomes. The purified P-glycoprotein, after reconstitution into liposomes, was capable of binding [3H]azidopine. When the cholesterol content of liposomes was increased to a weight ratio of 20%, the specific binding activity of the partially purified fusion protein was stimulated, and when the cholesterol content was increased higher, the binding activity decreased. The binding was specifically decreased by competition with vinblastine. Stigmasterol was less effective, and ergosterol was the least effective in stimulating the specific binding.