Mother-to-child transmission of HIV and other infectious disease agents, such as Listeria monocytogenes (LM), pose high risks to unborn babies. Furthermore, upon birth, neonates are threatened by bacteria present in the vicinity of the birth canal, e.g., Staphylococcus aureus (SA). Two unique layers surrounding fetuses provide protection against infection: the lipid-rich vernix caseosa (VC) and amniotic fluid (AF). Our collaborators recently discovered that AF contains antibody-independent, innate anti-HIV factors but their molecular source remains unclear. Innate immunity provides first line defense against infectious diseases and host-derived lipids, including cholesteryl esters (CE), have emerged as key antimicrobial molecules. We hypothesized that lipids in AF and VC have antimicrobial activity. We obtained from our collaborators AF and VC and prepared liposomes from total lipid extracts via sonication under heat with and without additional phospholipid supplementation to increase CE recovery. Light microscopy was employed to assess formation of liposomes and thin layer chromatography, with visualization in iodine vapor, to assess lipid recovery in liposomes. Antibacterial activity of AF and VC liposomes was determined by a 3h colony forming unit assay with mid-logarithmic growth phase LM. Light microscopy revealed successful generation of liposomes. For AF, the liposomal lipid profiles were comparable to the lipid distribution in the original material. For VC, additional phospholipid (phosphatidylcholine plus phosphatidylserine or distearoylphosphatidylglycerol) was required to recover CEs in liposomes. Three of five AF liposomal preparations exhibited anti-LM activity with up to 64% growth inhibition, compared to the assay growth control. CEs in VC appeared to have at most a proliferation delaying activity against LM. Thus, VC may play a bigger role in the protection against infection with microbes encountered during birth, and we are currently assessing the anti-SA activity of VC lipids. This work may lead to the identification of novel factors preventing transplacental and neonatal infections and may have significant clinical applications in fetus protection in utero and upon birth. Acknowledgements: Drs. Farzin, Bryson, and Faull, and Ms. Ank, UCLA. CSU-LSAMP is supported by the National Science Foundation under Grant# HRD-1302873 and the CSU Office of the Chancellor; 2012 Howell-CSUPERB Scholars Award; MBRS-RISE GM61331, 1SC1GM096916.