Energy-dependent uphill transport but not energy-independent downhill transport by lactose permease (LacY) is impaired when expressed in Escherichia coli cells or reconstituted in liposomes lacking phosphatidylethanolamine (PE) and containing only anionic phospholipids. The absence of PE results in inversion of the N-terminal half and misfolding of periplasmic domain P7, which are required for uphill transport of substrates. Replacement of PE in vitro by lipids with no net charge (phosphatidylcholine (PC), monoglucosyl diacylglycerol (GlcDAG), or diglucosyl diacylglycerol (GlcGlcDAG)) supported wild type transmembrane topology of the N-terminal half of LacY. The restoration of uphill transport in vitro was dependent on LacY native topology and proper folding of P7. Support of uphill transport by net neutral lipids in vitro (PE > PC ≫ GlcDAG ≠ GlcGlcDAG provided that PE or PC contained one saturated fatty acid) paralleled the results observed previously in vivo (PE = PC > GlcDAG ≠ GlcGlcDAG). Therefore, a free amino group is not required for uphill transport as previously concluded based on the lack of in vitro uphill transport when fully unsaturated PC replaced E. coli-derived PE. A close correlation was observed in vivo and in vitro between the ability of LacY to carry out uphill transport, the native conformation of P7, and the lipid headgroup and fatty acid composition. Therefore, the headgroup and the fatty acid composition of lipids are important for defining LacY topological organization and catalytically important structural features, further illustrating the direct role of lipids, independent of other cellular factors, in defining membrane protein structure/function.