We report on the synthesis, biological function, and a plausible mode of action of a new group of lipopeptides with potent antifungal and antibacterial activities. These lipopeptides are derived from positively charged peptides containing d- and l-amino acids (diastereomers) that are palmitoylated (PA) at their N terminus. The peptides investigated have the sequence K(4)X(7)W, where X designates Gly, Ala, Val, or Leu (designated d-X peptides). The data revealed that PA-d-G and PA-d-A gained potent antibacterial and antifungal activity despite the fact that both parental peptides were completely devoid of any activity toward microorganisms and model phospholipid membranes. In contrast, PA-d-L lost the potent antibacterial activity of the parental peptide but gained and preserved partial antifungal activity. Interestingly, both d-V and its palmitoylated analog were inactive toward bacteria, and only the palmitoylated peptide was highly potent toward yeast. Both PA-d-L and PA-d-V lipopeptides were also endowed with hemolytic activity. Mode of action studies were performed by using tryptophan fluorescence and attenuated total reflectance Fourier transform infrared and circular dichroism spectroscopy as well as transmembrane depolarization assays with bacteria and fungi. The data suggest that the lipopeptides act by increasing the permeability of the cell membrane and that differences in their potency and target specificity are the result of differences in their oligomeric state and ability to dissociate and insert into the cytoplasmic membrane. These results provide insight regarding a new approach of modulating hydrophobicity and the self-assembly of non-membrane interacting peptides in order to endow them with both antibacterial and antifungal activities urgently needed to combat bacterial and fungal infections.