We used fluorescence correlation spectroscopy (FCS) to analyze the binding of fluorescently labeled peptides to lipid vesicles and compared the deduced binding constants to those obtained using other techniques. We used a well-characterized peptide corresponding to the basic effector domain of myristoylated alanine-rich C kinase substrate, MARCKS(151-175), that was fluorescently labeled with Alexa488, and measured its binding to large unilamellar vesicles (diameter approximately 100 nm) composed of phosphatidylcholine and phosphatidylserine or phosphatidylinositol 4,5-bisphosphate. Because the large unilamellar vesicles are significantly larger than the peptide, the correlation times for the free and bound peptide could be distinguished using single color autocorrelation measurements. The molar partition coefficients calculated from the FCS measurements were comparable to those obtained from binding measurements of radioactively labeled MARCKS(151-175) using a centrifugation technique. Moreover, FCS can measure binding of peptides present at very low concentrations (1-10 nmolar), which is difficult or impossible with most other techniques. Our data indicate FCS can be an accurate and valuable tool for studying the interaction of peptides and proteins with lipid membranes.