Evidence is presented to show that small unilamellar phosphatidylcholine vesicles with a diameter of approx. 20 nm are osmotically sensitive. Such vesicles respond to osmotic pressure by swelling or shrinking depending on the direction of the applied salt gradient. This is true for small unilamellar vesicles of egg phosphatidylcholine and dimyristoylphosphatidylcholine below and above their crystal-to-liquid crystal transition temperature. At the transition temperature the vesicles are osmotically insensitive due to the increased bilayer permeability resulting in rapid dissipation of salt gradients. Positive salt gradients produce shrinking and collapse of spherical phospholipid vesicles to disks. Shrinking of vesicles is associated with H2O and solute efflux, but only limited solute influx. Clustering of lipid molecules in the bilayers of the resulting disks can be detected by EPR spin labeling. Negative salt gradients produce swelling of vesicles which is associated with H2O and solute influx. Our experiments are consistent with an osmotically perturbed bilayer. In the presence of osmotic gradients the influx and efflux of H2O is coupled with the movement of ions and small molecules which in the absence of salt gradients or osmotic stress cannot pass the phospholipid bilayer. However, during osmotically induced shrinking and swelling of SUV the integrity of the phospholipid bilayer is maintained to the extent that vesicles do not break, and therefore equilibration between external medium and vesicle cavity does not take place.