This communication outlines a simple two-step approach of modification of 1 nm diameter Au nanoparticles using an aqueous solution of (1,2-dipalmitoyl-sn-glycero-3-phosphothio-ethanol) phospholipid (PL). Transmission electron microscopy as well as particle size analysis show that, as a result of PL reactions with Au particles, the initial Au nanoparticle size increases to 5 nm. Considering the size of the PL and their ability to form liposomes, 5 nm diameter spheres indicate that the PL bilayer was attached to the surface of Au particles and the PL-Au interactions are facilitated by the presence of thiol functionality. The change of surface electronic properties of PL-stabilized Au particles is manifested by the disappearance of the 217 and 290 nm absorbances due to 5d-6sp transitions in Au, which is likely attributed to the presence of S-H functionalities which increase the free electron density of the particle. As a consequence, two surface plasmons resulting from a collective oscillation of electrons in response to UV excitation disappear.