Harshness (skin irritation) of personal cleansing products is related to surfactant interactions with proteins and lipids in the upper layers of skin (stratum corneum). Cleanser surfactants can damage stratum corneum lipids either by their solubilzation in surfactant micelles or by fluidization of the lipid bilayers by surfactant penetration. The mechanism of interaction of sodium dodecyl sulfate (SDS) with a model phospholipid membrane is investigated in this work by studying the vesicle-to-micelle structural transition, which occurs due to the interaction of a phospholipid bilayer membrane with SDS. It was observed that the optical density as well as the hydrodynamic diameter increased upon the addition of SDS up to 2 mM due to surfactant adsorption on the liposomes and then decreased gradually upon further addition of SDS due to transition of the vesicle to a micelle. Two inflection points were observed on both the surface tension as well as SDS monomer activity plotted vs solubilization, corresponding to the onset and complete solubilization of the liposome, respectively. The electron paramagnetic resonance (EPR) spectrum of 5-doxyl stearic acid (5-DSA), a lipid probe molecule, indicates immobilization of the probe molecule in the lipid bilayer in SDS-free solution. The mobility of 5-doxyl molecules in the liposome changes slightly with SDS concentration up to 2 mM, supporting the hypothesis that SDS molecules adsorb on the liposome without any structural disruption. Upon further addition of SDS, the mobility of the lipid probe increases sharply, indicating the disruption of the bilayer, ultimately resulting in complete solubilization of the liposome into a mixed micelle with SDS. The hyperfine coupling constant value of 5-doxyl molecules in a mixed micelle is observed to be higher than that in a pure SDS micelle, suggesting the core of the mixed micelle is more hydrophobic than that of the SDS micelle.