Two prevailing theories for dry membrane preservation are the water replacement hypothesis and glass formation. A manifestation of the water replacement hypothesis is the ability of sugars to depress dry membrane main phase transition temperatures (T-m). Differential scanning calorimetry (DSC) was employed to test the effects of sugars (trehalose, alpha-lactose, maltose and glucose) on the T(m)s of slowly frozen, lyophilized liposomes prepared from hydrogenated egg phosphatidylcholine [HEPC], dipalmitoylphosphatidylcholine [DPPC] and palmitoyloleoylphosphatidylcholine [POPC]. For each lyophilized phospholipid membrane, the disaccharides caused significant T-m reduction to at least 14 degrees C below the hydrated membrane T(m)s. The T(m)reduction was achieved by heating the lyophilized product: an annealing process that included a membrane phase transition and a disaccharide glass transition. Thermogravimetric analysis (TGA) showed residual water loss (3-6%) during annealing and FTIR spectra suggested an annealing-induced disaccharide/phospholipid-carbonyl interaction. Scanning electron microscopy (SEM) showed an amorphous appearance of the lyophilized trehalose/HEPC matrix, which was confirmed by DSC to be glassy, and which remained intact after annealing. Also observed with SEM were membrane infolding, fusion of unprotected liposomes, and matrix porosity. Discussed are the potential implications of annealing, dry membrane T-m-reduction and glass formation for liposome dehydroprotection.