Incorporation of ganglioside GM1 into liposomes composed of phosphatidylcholine (PC) and cholesterol significantly increases their blood circulation time. Dipalmitoyl PC (DPPC) and distearoyl PC (DSPC) are the most commonly used saturated phospholipids employed in the preparation of long-circulating liposome formulations. Physical studies were performed on different formulations of these liposomes in an attempt to understand the effects of the matrix lipid chain length and GM1 concentration on the use of these liposomes as long-circulating drug delivery systems. The GM1/PC mixtures existed in different physical states: a lamellar state with components exhibiting miscibility (which is the desired state for drug delivery), a mixed micellar phase, and also a smectic mesophase. GM1 is miscible with DSPC bilayers up to a concentration of 25 mol%, beyond which conversion into the metastable mesophase occurs. By 30 mol%, solubilization into the mixed micellar state occurs. With DPPC, the metastable mesophase occurs at 33-38 mol% of GM1, with mixed micelles being formed at higher concentrations. The addition of cholesterol led to an inhibition of micelle formation. This study also indicates that GM1 stabilizes DPPC bilayers while destabilizing DSPC bilayers. On the basis of the interactions of GM1 with DPPC and DSPC, a new hypothesis for stabilization of PC bilayers is proposed, which also explains the destabilization of PC with C18.0 and higher. The longest circulating GM1 liposome formulations are predicted from this study.