Bacteriorhodopsin (BR) was incorporated into large unilamellar dimyristoyl- and dipalmitoylphosphatidylcholine vesicles (100--300-nm radius). The effect of this intrinsic membrane protein on the order and dynamics of the lipid and on the cooperativity and transition temperature (Tc) of the gel to liquid-crystalline phase transition was investigated as a function of the lipid:protein ratio (L/BR). The lipid phase transition induces protein segregation. Above Tc, bacteriorhodopsin is in the monomeric state. Below Tc, BR is aggregated in the same hexagonal lattice as in the purple membrane (PM). In this reconstituted system, BR has a photochemical cycle similar to that in the PM and is active as a light-driven proton pump. The lipid phase transition which was monitored by using the steady-state anisotropy of the fluorescent probe 1,6-diphenyl-1,3,5-hexatriene (DPH) broadens with decreasing L/BR but occurs at approximately the same Tc. Below Tc, the fluorescence anisotropy of DPH is quite high (0.35) and independent of the L/BR. Above Tc, however, the anisotrophy increases markedly with decreasing L/BR. It was recently pointed out that the fluorescence anisotropy of probes like DPH contains information not only on the dynamics (correlation times) but also on the order parameters of the lipids [Heyn, M. P. (1979) FEBS Lett. 108, 359--364]. The most likely explanation of the observed increase in anisotropy above Tc is that the perturbation of the lipid bilayer caused by the incorporation of BR leads both to an increase in order and to a slowing of the rotational diffusion of the lipids (increased viscosity). In agreement with this latter dynamical effect, the rotational diffusion constant of BR itself decreases above Tc with decreasing L/BR. Above Tc, the membrane viscosity as determined from the rotational diffusion constant of BR is at least 1.5 times larger than that obtained from the fluorescence depolarization of DPH. The formation of the BR lattice as a function of temperature was followed by using the circular dichroism (CD) exciton effect together with measurements of the rotational diffusion of BR. Both methods show similar transition curves for the protein crystallization whose midpoints, however, occur several degrees below Tc.