Recent studies have shown that dipalmitoyl phosphatidyl choline (DPPC) monolayers respond cooperatively to the presence of dipyridamole (DIP) guest molecules even at small concentrations, which is a signature of molecular recognition. Using semiempirical quantum mechanical calculations for the DIP-DPPC system, we show that the incorporation of DIP causes large changes in the vertical dipole moment of the DIP-DPPC system, which can explain why measurable changes in surface potential are observed experimentally even at very low DIP concentrations. The calculations are also consistent with the anomalous concentration dependence of the surface pressure and surface potential isotherms for DIP-DPPC monolayers. Rather than saturation or a continuous increase in the effects caused by the incorporation of increasing amounts of DIP, the experimentally observed inversion in the behavior of the surface potential as the DIP concentration reaches 0.5 mol% would be caused by a change in DIP conformation, from a vertical arrangement for the DIP rings to a horizontal or intermediate arrangement. The strong dipolar interactions indicated in the calculations may also be the origin of the drastic changes in monolayer morphology seen in fluorescence microscopy images, with triskellion-shaped domains being formed for condensed DIP-DPPC monolayers. © 2006 American Chemical Society.