The morphological transition from vesicles to inverted hexagonally packed (hollow) rods was studied for asymmetric diblock copolymers of polystyrene-b-poly(ethylene oxide) (PS-b-PEO) in dilute solutions. The self-assembled aggregates were prepared by the addition of water to the copolymer solutions in tetrahydrofuran (THF) to induce the aggregation of the PS blocks, and the morphological transition was induced by an increase in the water content. Many intermediates, such as vesicles with hollow regions in the wall running parallel to the surfaces, as well as various quasihexagonal structures, were trapped. The mechanism of the transition involves a thickening of the vesicle walls accompanied by the formation of the hollow rods in the walls and a decrease in the size of the original water core. Evidence is presented that the transition proceeds in three steps. In the first step, hollow regions form in the walls of the vesicles. The second step involves further thickening of the walls and some alignment of the rods in a hexagonal pattern leading to the formation of quasihexagonal structures. Finally, the fully developed structures of inverted hexagonally packed rods form. This mechanism, especially in the initial step, is different from those found either in polystyrene-b-poly(acrylic acid) (PS-b-PAA) diblocks or in small molecule amphiphile systems, both of which involve fusion of vesicles. A comparison of the mechanisms is presented. Because of the ease of trapping of intermediates, the present study of the morphological transition may improve our understanding of the later stages of the process of the biomembrane fusion and the lipid lamellar (L-alpha) to inverted hexagonal (H-II) phase transition.