We report the results of constant temperature and pressure molecular dynamics calculations carried out on the liquid crystal (Lalpha) phase of dipalmitoylphosphatidylcholine with a mole fraction of 6.5% halothane (2-3 MAC). The present results are compared with previous simulations for pure dipalmitoylphosphatidylcholine under the same conditions (Tu et al., 1995. Biophys. J. 69:2558-2562) and with various experimental data. We have found subtle structural changes in the lipid bilayer in the presence of the anesthetic compared with the pure lipid bilayer: a small lateral expansion is accompanied by a modest contraction in the bilayer thickness. However, the overall increase in the system volume is found to be comparable to the molecular volume of the added anesthetic molecules. No significant change in the hydrocarbon chain conformations is apparent. The observed structural changes are in fair agreement with NMR data corresponding to low anesthetic concentrations. We have found that halothane exhibits no specific binding to the lipid headgroup or to the acyl chains. No evidence is obtained for preferential orientation of halothane molecules with respect to the lipid/water interface. The overall dynamics of the lipid-bound halothane molecules appears to be reminiscent of that of other small solutes (Bassolino-Klimas et al., 1995. J. Am. Chem. Soc. 117:4118-4129).