We previously reported that cord factor (alpha,alpha'-trehalose-6,6'-dimycolate) isolated from Nocardia asteroides strain GUH-2 strongly inhibits fusion between unilamellar vesicles containing acidic phospholipid. We chose to study the effects of this molecule on liposome fusion since the presence of N. asteroides GUH-2 in the phagosomes of mouse macrophages had been shown to prevent phagosomal acidification and inhibit phagosome-lysosome fusion. A virtually non-virulent strain, N. asteroides 10905, does not prevent acidification or phagosome-lysosome fusion and, further, contains only trace amounts of cord factor. In the present paper, we have investigated the effects of cord factor on phospholipid bilayers that could be responsible for the inhibition of fusion. We show that cord factor increases molecular area, measured by isothermal compression of a monolayer film, in a mixed monolayer more than would be expected based in its individual contribution to molecular area. Cord factor, as well as other glycolipids investigated, increased the overall hydration of bilayers of dipalmitoylphosphatidylcholine by 50%, as estimated from the unfrozen water fraction measured by differential scanning calorimetry. The effect of calcium on this increased molecular area and headgroup hydration was measured by fluorescence anisotropy and FTIR spectroscopy of phosphatidylserine liposomes. Both techniques showed that cord factor, incorporated at 10 mol%, increased acyl chain disorder over controls in the presence of Ca2+. However, FTIR showed that cord factor did not prevent headgroup dehydration by the Ca2+. The other glycolipids tested did not prevent either the Ca(2+)-induced chain crystallization or headgroup dehydration of phosphatidylserine bilayers. These data point to a possible role of the bulky mycolic acids of cord factor in preventing Ca(2+)-induced fusion of liposomes containing acidic phospholipids.