Immunosuppression remains a key issue in neural transplantation. Systemic administration of cyclosporin-A is currently widely used but has many severe adverse side effects. Newer immunosuppressive agents, such as tacrolimus (TAC) and rapamycin (RAPA), have been investigated for their neuroprotective properties on dopaminergic neurons. These drugs have been formulated into liposomal preparations [liposomal tacrolimus (LTAC) and liposomal rapamycin (LRAPA)] which retain these neuroprotective properties. Due to the slower release of the drugs from the liposomes, we hypothesized that co-transplantation of either LTAC or LRAPA within a xenogeneic cell suspension would increase cell survival and decrease graft rejection in the hemiparkinsonian rat, and that a combination of the two drugs may have a synergistic effect. 6-hydroxydopamine-lesioned rats were divided to four groups which received intra-striatal transplants of the following: 1) a cell suspension containing 400,000 fetal mouse ventral mesencephalic cells; 2) the cell suspension containing 0.63 microM LRAPA; 3) the cell suspension containing a dose of 2.0 microM LTAC; 4) the cell suspension containing 2.0 microM LTAC and 0.63 microM LRAPA. Functional recovery was assessed by amphetamine-induced rotational behavior. Animals were killed at 4 days or 6 weeks post-transplantation, and immunohistochemistry was performed to look at the expression of tyrosine hydroxylase and major histocompatibility complex classes I and II. Only the group receiving LTAC had a decrease in rotational behavior. This observation correlated well with significantly more surviving tyrosine hydroxylase immunoreactive cells compared with the other groups and significantly lower levels of immunorejection as assessed by major histocompatibility complex class I and II staining. This study has shown the feasibility of using local immunosuppression in xenotransplantation. These findings may be useful in optimizing immunosuppression in experimental neural transplantation in the laboratory and its translation into the clinical setting.