The idea that the physical properties of cuticular lipids affect cuticular permeability goes back over 65 years. This proposal has achieved textbook status, despite controversy and the general lack of direct supporting evidence. Recent work supports the standard model, in which lipid melting results in increased cuticular permeability. Surprisingly, although all species studied to date can synthesize lipids that remain in a solid state at environmental temperatures, partial melting often occurs due to the deposition of lipids with low melting points. This will tend to increase water loss; the benefits may include better dispersal of lipids or other compounds across the cuticle or improved communication via cuticular pheromones. In addition, insects with high melting-point lipids are not necessarily less permeable at low temperatures. One likely reason is variation in lipid properties within the cuticle. Surface lipids differ from one region to another, and biophysical studies of model mixtures suggest the occurrence of phase separation between melted and solid lipid fractions. Lipid phase separation may have important implications for insect water balance and chemical communication.