3-Hydroxybutyric acid (also referred to as beta-hydroxybutyric acid or BHB), a small molecule metabolite whose concentration is elevated in type I diabetes and diabetic coma, was found to modulate the properties of 1,2-dipalmitoyl-sn-glycero-3-phosphocholine (DPPC) monolayers when added to the subphase at clinical concentrations. This is a key piece of evidence supporting the hypothesis that the anesthetic actions of BHB are due to the metabolite's abilities to alter physical properties of cell membranes, leading to indirect effects on membrane protein function. Pressure-area isotherms show that BHB changes the compressibility of the monolayer and decrease the size of the two-phase coexistence region. Epi-fluorescent microscopy further reveals that the reduction of the coexistence region is due to the significant reduction in morphology of the liquid condensed domains in the two-phase coexistence region. These changes in monolayer morphology are associated with the diminished interfacial viscosity of the monolayers (measured using an interfacial stress rheometer), which gives insight as to how changes in phase and structure may contribute to membrane function.