The effect of the instillation of gamma-glutamylcysteinylethyl ester (gamma-GCE), which has been reported to function as a precursor of glutathione, on cataract formation was examined in rats in which diabetes had been induced by Streptozotocin (STZ). Three days after i.p. treatment with 50 mg/kg body weight of STZ, male Wistar rats aged 6 weeks received instillations of gamma-GCE in solution or liposomes prepared with dipalmitoylphosphatidylcholine (DPPC) for a period of 9 weeks. Cataract formation and development were observed by use of a cataract camera every week. After 9 weeks' observation, the lenses were enucleated and the content of the lens GSH was measured. Instillation of gamma-GCE in solution or liposomes to STZ-diabetic rats not only inhibited cataract formation but also kept lens GSH level almost at the control level. In addition, the inhibitory effect of the instillation of gamma-GCE in liposome was stronger than that of gamma-GCE in solution. The present results indicate that the administration of gamma-GCE in solution or in liposomes inhibits diabetic cataract formation, possibly by preventing lens GSH depletion.