LPS-binding protein (LBP) catalyzes the movement of LPS (endotoxin) from micelles directly to high density lipoprotein (HDL) particles, and this activity results in neutralization of the biologic activities of LPS. LBP also catalyzes the transfer of LPS to HDL by a two-step mechanism in which LPS is transferred to soluble CD14 (sCD14), and then from LPS-sCD14 complexes to HDL. In this work, we show that the phospholipid component of HDL, phosphatidylcholine (PC), is both necessary and sufficient for LBP-catalyzed neutralization of LPS through either mechanism. Our observation that LBP and sCD14 can transport LPS into phospholipid bilayers suggests that LBP and membrane CD14 may transport LPS into the phospholipid bilayer of cells such as monocytes and neutrophils. Studies with a variety of purified phospholipids showed that: 1) PC, phosphatidylserine, phosphatidylinositol, and sphingomyelin can neutralize LPS, while phosphatidylethanolamine, ceramide, and lactosylceramide cannot. 2) PC containing saturated long chain acyl groups (distearoyl-PC) does not neutralize LPS, but PC containing unsaturated long chain acyl groups (dioleoyl-PC) rapidly neutralizes LPS. 3) Inclusion of sCD14 is absolutely necessary to observe LBP-dependent neutralization of LPS by sphingomyelin, globoside, and phosphatidylserine. 4) Inclusion of sCD14 enhances movement to longer chain PC vesicles, but slows movement to certain short chain vesicles. These findings indicate that LBP and sCD14 will rapidly transfer LPS to certain membranes based on the kinetics of the movement of LPS into these membranes. This discrimination may target LPS to certain classes of lipoprotein, certain cell types, or even certain lipid domains at the cell surface.