Leucinyl-phenylalanyl-valine (LFV) is a hydrophobic tripeptide with a flat egg shaped structure with the long axis dimension of about 12 angstroms. The effect of LFV on dimyristoylphosphatidylcholine (DMPC) liposome membrane has been studied by differential scanning calorimetry (DSC) and fluorescence spectroscopy. Calorimetric studies shows that incorporation of LFV completely abolishes the pretransition temperature with broadening of main transition temperature. Four conceptually different fluorescence probes, 1-naphthol (1-ROH) an excited state proton transfer probe, 8-anilino-1-naphthalenesulphonate (ANS) a solvent polarity probe, 1-6-diphenylhexatriene (DPH) an anisotropy probe and pyrene an excimer-forming probe have been used for fluorescence spectroscopic studies. For 1-ROH, ANS and DPH, a decreased partitioning with increasing mol.% of LFV was observed. Increasing LFV mol.% caused a decrease in the neutral form emission of 1-ROH, and a decrease in fluorescence intensity with red shift in ANS. The excimer formation ability of pyrene also decreased. The phase transition behavior of DMPC membrane in the presence of LFV was similar to the known effect of cholesterol on lipid bilayers. These results suggest that LFV cause an increased compactness of membrane.