Melittin, a cationic hemolytic peptide, is intrinsically fluorescent due to the presence of a single functionally important tryptophan residue. The organization of membrane-bound melittin is dependent on the physical state and composition of membranes. In particular, polyunsaturated lipids have been shown to modulate the membrane-disruptive action of melittin. Phospholipids with polyunsaturated acyl chains are known to modulate a number of physical properties of membranes and play an important role in regulating structure and function of membrane proteins. In this study, we have used melittin to address the influence of unsaturated lipids in modulating lipid-protein interactions. Our results show that fluorescence parameters such as intensity, emission maximum, polarization, lifetime and acrylamide quenching of melittin incorporated in membranes are dependent on the degree of unsaturation of lipids in membranes. Importantly, melittin in membranes composed of various unsaturated lipids shows red edge excitation shift (REES) implying that melittin is localized in a motionally restricted region in membranes. The extent of REES was found to increase drastically in membranes with increasing unsaturation, especially when the lipids contained more than two double bonds. In addition, increasing unsaturation in membranes causes a considerable change in the secondary structure of membrane-bound melittin. Taken together, our results assume significance in the overall context of the role of unsaturated lipids in membranes in the organization and function of membrane proteins and membrane-active peptides.