Small and wide-angle X-ray diffraction was used to study the phase behaviour of cholesterol-fatty acid mixtures in an attempt to understand lipid interaction occurring in the stratum corneum, the outermost layer of skin. The effect of the penetration enhancer Atone was investigated as well. It was found that equimolar mixtures of cholesterol, palmitic acid and oleic acid (with the acids neutralised to 41 mol%) in 25% (wt/wt) water typically showed three phases at room temperature, two crystalline and one gel phase. The crystalline phases consisted mainly of palmitic acid:soap and cholesterol, respectively. The water present was unevenly distributed and was associated with the gel phase. Both cholesterol and palmitic acid seemed to be depleted from their crystalline phases by Atone. The electrostatic effects on titration of fatty acids in lamellar aggregates were calculated in view of the present results, and the effects of phase separation were discussed. (C) 1998 Elsevier Science B.V.