Although poly(ethylene glycol) (PEG) has been widely used as an agent to induce cell aggregation and fusion, the physicochemical principles of its function are only becoming understood recently. PEG has an extremely high affinity for water. The PEG commonly used for these applications is in the molecular weight range of 8000 to 10 000. At low concentrations (0-15 wt.%), PEG in this molecular weight range tends to deplete from cell or lipid surfaces, creating an osmotic gradient which brings cells or lipid vesicles together. The depletion force is measured using a surface force apparatus. The corresponding reduction of surface viscosity is verified by shear viscosity measurements and by vesicle tumbling experiments. At higher concentrations (15-45 wt.%), the extremely high osmotic pressure generated by PEG compresses apposing surfaces of aggregated cells or vesicles to within limits where the membrane is no longer stable, and fusion occurs at point defects. A fusion lumen is formed with the help of cell swelling. If PEG is adsorbed or covalently link to the cell or vesicle surface, the surface force profile becomes entirely repulsive, and aggregation and fusion is inhibited. The repulsion is accountable by steric and electrostatic forces. Therefore, the fusogenic function of PEG can be explained quantitatively by colloidal stability theories.