Mefloquine was administered in a single dose (1–30 mg/100 g) to rats in order to study its subcellular distribution and effects on rat liver lysosomal structure and function. Subcellular fractionation showed a significant enrichment of mefloquine in lysosomes. Even repeated administration of mefloquine did not affect the levels of cytochrome‐P‐450 or its reductase, indicating, although not proving, that it is not metabolized by this mono‐oxygenase system. Mefloquine caused an expansion of the lysosomal apparatus, earliest seen by 24 h and lasting for some 7 days. Initially, cytoplasmic constituents were seen inside the lysosomes. Later, the lysosomes harboured myelin‐like figures (multilamellar bodies) disappearing after 7–10 days. The proteolytic and lipolytic capacity was assessed in isolated lysosomes. Mefloquine caused increased protein degradation but decreased breakdown of lipids. Concomitantly, all five major phospholipids (phosphatidyl‐choline, ‐ethanolamine, ‐inositol, ‐serine and sphingomyelin) increased in the lysosomes. It is concluded that: (1) mefloquine is a lysosomotropic drug that accumulates in lysosomes; (2) mefloquine impairs lipid degradation with ensuing accumulation of lipids in lysosomes; and (3) lysosomal trapping explains the high volume distribution of mefloquine.