The role of the digestion of lipids in facilitating absorption of poorly water-soluble compounds, such as vitamins, is not only an important nutritional issue but is increasingly being recognized as an important determinant in the effectiveness of lipid-based drug formulations. It has been known for some time that lipids often form complex liquid crystalline structures during digestion and that this may impact drug solubilization and absorption. However, until recently we have been unable to detect and characterize those structures in real time and have been limited in establishing the interplay between composition, digestion, and nanostructure. Here, we establish the use of an in vitro lipid digestion model used in conjunction with synchrotron small-angle X-ray scattering by first confirming its validity using known, nondigestible liquid crystalline systems, and then extend the model to study the real time evolution of nanostructure during the digestion of common formulation lipids. The formation of liquid crystalline structures from unstructured liquid formulations is discovered, and the kinetics of formation and dependence on composition is investigated.