Alamethicin adsorbs on the membrane surface at low peptide concentrations. However, above a critical peptide-to-lipid ratio (P/L), a fraction of the peptide molecules insert in the membrane. This critical ratio is lipid dependent. For diphytanoyl phosphatidylcholine it is about 1/40. At even higher concentrations P/L > or = 1/15, all of the alamethicin inserts into the membrane and forms well-defined pores as detected by neutron in-plane scattering. A previous x-ray diffraction measurement showed that alamethicin adsorbed on the surface has the effect of thinning the bilayer in proportion to the peptide concentration. A theoretical study showed that the energy cost of membrane thinning can indeed lead to peptide insertion. This paper extends the previous studies to the high-concentration region P/L > 1/40. X-ray diffraction shows that the bilayer thickness increases with the peptide concentration for P/L > 1/23 as the insertion approaches 100%. The thickness change with the percentage of insertion is consistent with the assumption that the hydrocarbon region of the bilayer matches the hydrophobic region of the inserted peptide. The elastic energy of a lipid bilayer including both adsorption and insertion of peptide is discussed. The Gibbs free energy is calculated as a function of P/L and the percentage of insertion phi in a simplified one-dimensional model. The model exhibits an insertion phase transition in qualitative agreement with the data. We conclude that the membrane deformation energy is the major driving force for the alamethicin insertion transition.