We have studied the interaction between three compounds which accumulate in organisms under hydration stress--proline, betaine, and trehalose--and the membrane phospholipids dimyristoylphosphatidylcholine (DMPC), palmitoyloleoylphosphatidylcholine (POPC), and dimyristoylphosphatidylethanolamine in bulk solution. Film balance studies reveal that these compounds increase the area/molecule of these lipids. Differential scanning calorimetry has been employed to investigate the effect these agents have on the gel-to-liquid crystalline phase transition of multilamellar and small unilamellar vesicles of DMPC, dipalmitoylphosphatidylcholine, and POPC:phosphatidylserine (90:10 mole ratio) in bulk solution. In the presence of 1 M proline, trehalose, or betaine, the midtransition temperature in small unilamellar vesicles is reduced (up to 7 degrees C in 1 M trehalose), and the transition broadened. In contrast, multilamellar vesicles of similar lipid composition show an increased transition temperature in the presence of the same concentration of these compounds. This result suggests that the inner lamellae in multilamellar vesicles may be dehydrated with only a few outer lamellae exposed to the protective compound. Finally, we have used stereomodels of phosphatidylcholine to investigate the mechanism of action of these agents. Hydrogen bonding of trehalose to the head group region results in an increase in the distance between head groups of 6.9 A. This amount of spreading compares well with data from the monolayer experiments which indicate that maximal spreading of DMPC monolayers by trehalose is 6.5 A. Molecular models of proline and betaine have also been constructed, and these models suggest potential interactions between these compounds and phosphatidylcholines. For the amphipath proline, this interaction may involve intercalation between phospholipid head groups.