The alignment of dilauryl-, dimyristoyl-, and dipalmitoylphosphatidylcholine at various water concentrations into large oriented monodomain multilayers by annealing at elevated temperatures (Powers and Clark, 1975, Proc. Natl. Acad. Sci. U.S.A. 72:840; Powers and Pershan. 1977. Biophys. J. 20:137) is accompanied by the formation and subsequent dissolution of various defect structures. Some of these defects appear similar to those observed in thermotropic and other lyotropic liquid crystals, reflecting the lamellar structure of these materials. The formation and evolution of defects during the alignment of the lipids into the defect-free, monodomain, multilamellar geometry is studied using polarized microscopy. A combination of polarized and dark-field microscopy facilitated characterization of the defects; specific structural models are proposed. A new alignment technique involving compression and dilation of the lipid, which effects sample alignment at temperatures that are lower than those required by the Powers technique, is described. Lower temperature alignment avoids thermal decomposition that will sometimes occur if the lipid is maintained at elevated temperatures for prolonged periods. With this technique, samples (80 micrometer thick) of dilaurylphosphatidylcholine with 20% water by weight were aligned at room temperature.