A novel delivery system for the anticancer drug arsenic trioxide (ATO) is characterized. The release of ATO from DPPC liposomes with MPPC lysolipid incorporated into the bilayer is measured. There is negligible leakage of ATO from all systems at 25°C. Upon heating the liposomes to 37°C, there is 15% to 25% release over a 24 h time period. The ATO release from the DPPC and DPPC:MPPC(5%) systems levels off after 10 h at 37°C, whereas the DPPC:MPPC(10%) liposomes continue to release ATO over the 24 h timespan. Upon heating the liposomes rapidly to 42°C, through the gel to liquid-crystalline (LC) phase transition, the release rate is substantially increased. The two systems containing lysolipids, DPPC:MPPC(5%) and DPPC:MPPC(10%), exhibit a very rapid release of a significant amount of arsenic in the first hour. In the first hour, the DPPC:MPPC(5%) liposomes release 40% of the arsenic and the DPPC:MPPC(10%) liposomes release 55% of the arsenic. Arsenic release from pure DPPC liposomes is comparable at 37°C and 42°C, indicating presence of lysolipid is necessary for a significant enhancement of the release rate. A coarse-grained molecular dynamics (CGMD) model is used to investigate the enhanced permeability of lysolipid-incorporated liposomes and lipid bilayers. The CG liposomes did not form a gel phase when cooled due to the high curvature, however permeability was still significantly lower at 12°C, below what would be the liquid to gel phase transition temperature. At 50°C and 77°C, above Tm, we find water permeability coefficients on the order of 1.0×10−3 cm s−1, in good agreement with experiment. From simulations of flat DPPC:MPPC bilayers we find that a peak in the permeability does coincide with the phase transition from the gel to LC state when the lysolipid MPPC is present. No pores are observed in the simulations, however due to limitations in the model, we cannot rule out the possibility of lysolipid-stabilized pores enhancing the permeability in the experiments.