The effects of merocyanine 540 on the electrical properties of lipid bilayer membranes have been investigated. The alterations this dye was found to produce in the intrinsic conductances of these membranes were minimal, but it profoundly altered the conductances produced by extrinsic permeant species. These alterations were much larger for neutral membranes than for negatively charged ones. The dye increased the conductances mediated by positively charged permeant species and decreased those by negatively charged permeant species, suggesting that it produces a negative electrostatic potential on the membrane; it also altered the kinetics and the voltage dependencies of permeation by these charge carriers. The magnitudes of dye-mediated conductance changes were much larger for positively charged permeants than for negatively charged ones; also, changes in ionic strength altered these dye effects in opposite directions from those predicted by the Stern equation, and the dependence of the conductance alteration on dye concentration was steeper than that predicted by this equation. Finally, only very small changes in liposome zeta potentials were induced by the dye. Calculations show that a large fraction of these effects can be accounted for by the dipole potential produced by merocyanine at the membrane surface, but that additional effects of the dye must be postulated as well.