Certain lipids form binary liquid crystalline (l.c.) phases with water. This is the only one case of a general high degree of interaction between the polar group of the lipid and water which is observed also as unduly large solubilities of water in lipids which are themselves insoluble in water. In the solid state, crystalline hydrates are formed in some cases. These systems are not only of great biological interest but the lipid-water interaction involves a little considered aspect of hydrogen bonding. The nature of these systems is being examined by the study not only of the lipids themselves but also their simple lower homologues.