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Cationic liposomes have provided many advantages over viral vector formulations; however, the problem of inefficient gene expression remains. This is due in part to the nuclear membrane, which limits DNA entry into the nucleus. Cytoplasmic expression systems using T7 RNA polymerase have been developed to express genes in the cytoplasm and avoid the need for nuclear import of DNA. Although these systems show improved transgene expression, little is known about how they function in transfected cells. Direct comparisons between a cytoplasmic and nuclear expression system were carried out with a 293 cell line stably expressing T7 RNA polymerase. A formulation for optimal reporter gene expression was developed and used in conjunction with a variety of subcellular trafficking inhibitors to study the process of DNA endocytosis. Transfected cells were also studied at different stages of the cell cycle to determine the dependence of each system on mitosis. These results showed that cytoplasmic and nuclear expression systems utilize similar endocytosis pathways to the point of endosomal release. Once DNA is released into the cytoplasm, the cytoplasmic expression system shows immediate expression that is proportional to the amount of DNA released. In contrast, DNA targeted for nuclear expression requires additional time for nuclear entry. The level of nuclear expression is also restricted by the limited amount of DNA that is imported into the nucleus. Finally, mitosis is required for effective nuclear expression but not for cytoplasmic expression. Therefore, the cytoplasmic expression system has considerable advantages over traditional nuclear expression systems and may be an effective method for transfecting nondividing cells.