1. The interaction of the germicide 3,3',4',5-tetrachlorosalicylanilide (T4CS) with vesicles and dispersions of egg phosphatidylcholine has been studied by gel permeation chromatography, electron microscopy, electron spin resonance spin labelling and ion permeability measurements. 2. Incorporation of T4CS into vesicles of egg phosphatidylcholine gives rise to a large increase in the permeability rate of the paramagnetic cation N,N-dimethyl-N-(1'-oxyl-2',2',6',6'-tetramethyl-4'-piperidyl)-2-hydroxyethylammonium chloride through the lipid bilayer but has no significant effect on the vesicle sizes as measured by gel permeation chromatography or electron microscopy. 3. ESR studies using a spin-labelled fatty acid have demonstrated the presence of two different environments for the spin label when T4CS is incorporated into phosphatidylcholine bilayers. These two environments are identified as (a) highly ordered areas of the bilayer, rich in T4CS and (b) areas with very similar ordering to that in pure egg phosphatidylcholine. 4. The effectiveness of very low concentrations of the germicide in increasing vesicle permeability is explained in terms of its clustering to give rigid patches, rich in T4CS, rather than being evenly distributed throughout the bilayer. It is proposed that the increased ion permeability arises from leakage at the interfaces between the rigid and flexible regions of the lipid bilayer. 5. Comparisons between the effective levels of T4CS in phosphatidylcholine vesicles and its minimum inhibitory concentration with a Gram-positive bacterium confirm the validity of phospholipid vesicles as a model for studies of germicidal activity.