We have studied lipid lateral phase separation (LPS) in the intact sarcoplasmic reticulum (SR) membrane and in bilayers of isolated SR membrane lipids as a function of temperature, [Mg+2], and degree of hydration. Lipid LPS was observed in both the intact membrane and in the bilayers of isolated SR lipids, and the LPS behavior of both systems was found to be qualitatively similar. Namely, lipid LPS occurs only at relatively low temperature and water content, independently of the [Mg+2], and the upper characteristic temperature (th) for lipid LPS for both the membrane and bilayers of its isolated lipids coincide to within a few degrees. However, at similar temperatures, isolated lipids show more LPS than the lipids in the intact membrane. Lipid LPS in the intact membrane and in bilayers of the isolated lipids is fully reversible, and more extensive for samples partially dehydrated at temperatures below th. Our previous x-ray diffraction studies established the existence of a temperature-induced transition in the profile structure of the sarcoplasmic reticulum Ca+2ATPase which occurs at a temperature corresponding to the [Mg+2]-dependent upper characteristic temperature for lipid LPS in the SR membrane. Furthermore, the functionality of the ATPase, and in particular the lifetime of the first phosphorylated enzyme conformation (E1 approximately P) in the Ca+2 transport cycle, were also found to be linked to the occurrence of this structural transition. The hysterisis observed in lipid LPS behavior as a function of temperature and water content provides a possible explanation for the more efficient transient trapping of the enzyme in the E1 approximately P conformation observed in SR membranes partially dehydrated at temperatures below th. The observation that LPS behavior for the intact SR membrane and bilayers of isolated SR lipids (no protein present) are qualitatively similar strongly suggests that the LPS behavior of the SR membrane lipids is responsible for the observed structural change in the Ca+2ATPase and the resulting significant increase in E1 approximately P lifetime for temperatures below th.