The fusogenic properties of gramicidin were investigated by using large unilamellar dioleoylphosphatidylcholine vesicles. It is shown that gramicidin induces aggregation and fusion of these vesicles at peptide to lipid molar ratios exceeding 1/100. Both intervesicle lipid mixing and mixing of aqueous contents were demonstrated. Furthermore, increased static and dynamic light scattering and a broadening of 31P NMR signals occurred concomitant with lipid mixing. Freeze-fracture electron microscopy revealed a moderate vesicle size increase. Lipid mixing is paralleled by changes in membrane permeability: small solutes like carboxyfluorescein and smaller dextrans, FD-4(Mr approximately 4000), rapidly (1-2 min) leak out of the vesicles. However, larger molecules like FD-10 and FD-17 (Mr approximately 9400 and 17,200) are retained in the vesicles for greater than 10 min after addition of gramicidin, thereby making detection of contents mixing during lipid mixing possible. At low lipid concentrations (5 microM), lipid mixing and leakage are time resolved: leakage of CF shows a lag phase of 1-3 min, whereas lipid mixing is immediate and almost reaches completion during this lag phase. It is therefore concluded that leakage, just as contents mixing, occurs subsequent to aggregation and lipid mixing. Although addition of gramicidin at a peptide/lipid molar ratio exceeding 1/50 eventually leads to hexagonal HII phase formation and a loss of vesicle contents, it is concluded that leakage during fusion (1-2 min) is not the result of HII phase formation but is due to local changes in lipid structure caused by precursors of this phase. By making use of gramicidin derivatives and different solvent conformations, it is shown that there is a close parallel between the ability of the peptide to induce the HII phase and its ability to induce intervesicle lipid mixing and leakage. It is suggested that gramicidin-induced fusion and HII phase formation share common intermediates.