Reconstitution of membrane-bound enzymes and transport proteins with the artificial phospholipid bilayer (liposomes) is one of the most useful techniques to study the functional aspects of these proteins. Several biochemical and biophysical parameters related to the expression of the functions of these proteins can be conveniently studied in the reconstituted proteoliposomes. Methods have been described for the preparation of model membranes and emphasis has been given specially to liposomes. Methodologies for the reconstitution of biologically active proteoliposomes using varieties of membrane-bound enzymes and proteins and their assay have been presented in details. The merits and demerits of each method and the subsequent modification of the technique have been indicated. Factors controlling the orientation and functions of the enzymes and carrier proteins in the reconstituted proteoliposomes have also been described. Attempts have been made to include few examples to describe how the reconstituted model membrane is helping us to know the molecular basis of many salient features of the biomembranes. Finally, the possible application of the proteoliposomes for the study of other complex membrane phenomena has been postulated.