Lipopolysaccharide (LPS) provides a well-organized permeability barrier at the outer membrane of Gram-negative bacteria. Host defense cationic antimicrobial peptides (AMPs) need to disrupt the outer membrane before gaining access to the inner cytoplasmic membrane or intracellular targets. Several AMPs are largely inactive against Gram-negative pathogens due to the restricted permeation through the LPS layer of the outer membrane. MSI-594 (GIGKFLKKAKKGIGAVLKVLTTG) is a highly active AMP with a broad-spectrum of activities against bacteria, fungi, and virus. In the context of LPS, MSI-594 assumes a hairpin helical structure dictated by packing interactions between two helical segments. Residue Phe5 of MSI-594 has been found to be engaged in important interhelical interactions. In order to understand plausible structural and functional inter-relationship of the helical hairpin structure of MSI-594 with outer membrane permeabilization, a mutant peptide, termed MSI-594F5A, containing a replacement of Phe5 with Ala has been prepared. We have compared antibacterial activities, outer and inner membrane permeabilizations, LPS binding affinity, perturbation of LPS micelles structures by MSI-594 and MSI-594F5A peptides. Our results demonstrated that the MSI-594F5A has lower activities against Gram-negative bacteria, due to limited permeabilization through the LPS layer, however, retains Gram-positive activity, akin to MSI-594. The atomic-resolution structure of MSI-594F5A has been determined in LPS micelles by NMR spectroscopy showing an amphipathic curved helix without any packing interactions. The 3D structures, interactions, and activities of MSI-594 and its mutant MSI-594F5A in LPS provide important mechanistic insights toward the requirements of LPS specific conformations and outer membrane permeabilization by broad-spectrum antimicrobial peptides.