The feasibility of a large-volume liquid xenon Compton telescope based on full event imaging in a time projection chamber has been demonstrated with the development of the balloon-borne instrument LXeGRIT. With its 400 cm2sensitive area and 7 cm drift gap, the liquid xenon detector images &ggr;-rays in the energy range from 200 keV to 25 MeV. The precise 3-dimensional localization of &ggr;-ray interactions within the sensitive volume provides excellent background reduction capabilities. Together with the large efficiency of a homogeneous detector volume, LXeGRIT addresses the primary instrumental limitations encountered in this energy band. Following engineering tests at balloon altitude in 1997, LXeGRIT has been upgraded with a new trigger and data acquisition system, integrated with the existing readout electronics. Enhanced data transfer capability and onboard data storage were also implemented. LXeGRIT was successfully flown from Ft. Sumner, NM on May 7, 1999. The instrument worked as expected at balloon altitude. The large amount of data gathered during the 9.5 h flight are currently being analyzed. We describe the instrument and present some results from calibration data and preliminary results from the flight. ©2000 American Institute of Physics.