Ganglioside compositions of plasma membrane fractions highly purified from rat liver and hepatomas by phase partitioning were compared with those of fractions composed of internal membranes, free of plasma membrane. With liver, 70-80% of the the lipid bound sialic acid were accounted for by a plasma membrane location. In hepatomas this percentage was reduced to 50-65%. More pronounced was the distribution of the simple monosialoganglioside GM3. In the hepatomas, 60-80% of the GM3 was found associated with internal membranes as compared to liver where only 35% of the GM3 was present in internal membranes. The findings suggest a glycolipid sorting defect in hepatocarcinogenesis where gangliosides, and especially monosialogangliosides, are diverted to internal membranes rather than being correctly transported to the cell surface. Since GM3 is synthesized exclusively in the Golgi apparatus of both liver and hepatomas, the basis for the sorting defect may reside in a functionally altered Golgi apparatus.