Direct measurement of the free energies of transfer of hydrophobic membrane-spanning alpha-helices from water to membranes is important for the determination of an accurate experiment-based hydrophobicity scale for membrane proteins. An important objective of such a scale is to account for the presently unknown thermodynamic cost of partitioning hydrogen-bonded peptide bonds into the membrane hydrocarbon core. We describe here the physical properties of a transmembrane (TM) peptide, TMX-1, designed to test the feasibility of engineering peptides that spontaneously insert across bilayers but that have the important property of measurable monomeric water solubility. TMX-1, Ac-WNALAAVAAAL-AAVAAALAAVAAGKSKSKS-NH(2), is a 31-residue sequence with a 21-residue nonpolar core, N- and C-caps to favor helix formation, and a highly polar C-terminus to improve solubility and to control directionality of insertion into lipid vesicles. TMX-1 appeared to be soluble in water up to a concentration of at least 1 mg/mL (0.3 mM). However, fluorescence spectroscopy, fluorescence quenching, and circular dichroism (CD) spectroscopy indicated that the high solubility was due to the formation of molecular aggregates that persisted at peptide concentrations down to at least 0.1 microM peptide. Nevertheless, aqueous TMX-1 partitioned strongly into membrane vesicles with apparent mole-fraction free-energy values of -7.1 kcal mol(-1) for phosphatidylcholine (POPC) vesicles and -8.2 kcal mol(-1) for phosphatidylglycerol (POPG) vesicles. CD spectroscopy of TMX-1 in oriented multilayers formed from either lipid disclosed a very strong preference for a transmembrane alpha-helical conformation. When TMX-1 was added to preformed vesicles, it was fully helical. A novel fluorescence resonance energy transfer (FRET) method demonstrated that at least 50% of the TMX-1 insered spontaneously across the vesicle membranes. Binding and insertion were found to be fully reversible for POPC vesicles but not POPG vesicles. TMX-1 was thus found to have many of the properties required for thermodynamic measurements of TM peptide insertion. Importantly, the results obtained delineate the experimental problems that must be considered in the design of peptides that can partition spontaneously and reversibly as monomers into and across membranes. Our success with TMX-1 suggests that these problems are not insurmountable.