Despite decades of study, the exact mechanism for chromatic transitions in polydiacetylene materials remains somewhat elusive. The mechanism of the blue to red color transition for overcompressed mixed lipid thin films of 10,12 pentacosadiynoic acid has been investigated by atomic force microscopy. Blue layers were prepared by the horizontal Langmuir-Schaefer deposition method. The red form was attained by thermal annealing of blue films !thermochromism). The blue films reveal micro-sized domains. Each domain shows a stripelike morphology on top of a nearly complete layer. The polymer backbone direction shows a high degree of order. A partial disorder is shown to exist along the interbackbone direction. Our study of the red form films indicates that changes occur in the micron-scale morphology of the films. Interestingly the alkyl side chains rearrange into a completely ordered structure and remain ordered well beyond the transition temperature (70 degrees C < T < 90 degrees C). Our results strongly suggest that the reorganization of the side chains is the origin of the thermochromic effect for these films.