The membrane lipid phase may be an important mediator of the peptide-receptor interaction. In order to understand the mechanism of this interaction, it is important to know the peptide structure, not only in the hydrophobic lipid bilayer environment, but also at the bilayer surface and in solution. To investigate this problem we have measured the secondary structure of the 11-residue neuropeptide substance P (SP) and its fragments in aqueous solutions, in membrane mimetic solvents, and associated with lipid bilayers using Raman and CD spectroscopy. Raman and CD spectra of SP bound to liposomes indicate a less than 20% helix content. We interpret these results to indicate that SP contains virtually no helix when bound to negatively charged liposomes. These spectra are similar to spectra of peptides in type I and III beta-turns. SP forms between 10 and 30% (1-3 residues) helical structure in sodium dodecyl sulfate micelles and less than 10% helix in methanol and trifluoroethanol. The binding of SP to negatively charged liposomes significantly changes the structure of the lipid acyl chains, decreasing order in some cases and increasing it in others. Raman spectra of SP in water indicates that SP near 30 mM forms an ensemble of structures in water that is distinct from completely unfolded peptide and from the aggregated beta-sheet form observed in saline solutions. We conclude from our CD results that methods used to quantitate secondary structure from CD spectra of short peptides cannot be used to distinguish between very short helical segments and beta-turns.