We have studied the interaction between phospholipids and a-factor (YIIKGVFWDPAC-[Farn]OMe), S-alkylated forms of a-factor with the farnesyl group substituted by methyl, hexadecanyl, or benzyl groups, and truncated forms of this lipopeptide. Circular dichroism studies suggest that, despite its lack of farnesylation, S-methyl-a-factor is incorporated into vesicles of dimyristoylphosphatidylcholine in a conformation similar to that which a-factor adopts in this membrane. However, studies of the intrinsic fluorescence of the Trp residues of these peptides indicate that this residue is more deeply imbedded into the bilayer in the case of the farnesylated peptide. The a-factor is more effective in raising the bilayer to the hexagonal phase transition temperature of dielaidoylphosphatidylethanolamine than is the S-methyl-a-factor. This bilayer-stabilizing ability is also reflected in a-factor inhibiting leakage from vesicles of N-methyldioleoylphosphatidylethanolamine. Studies on a-factor analogs permit the conclusion that the bilayer-stabilizing effect of a-factor is not solely a consequence of its greater partitioning into the membrane but is also a consequence of the degree of penetration into the bilayer and the specific conformation of the peptide at the membrane interface. These results indicate that the farnesyl group alone, in the absence of cellular factors, bestows a particular physical interaction with membranes.