The activity of the potent but highly toxic antifungal drug Amphotericin B (AmB), used intravenously to treat systemic fungal and parasitic infections, is widely accepted to result from its specific interaction with the fungal sterol ergosterol. While the effect of sterols on AmB activity has been intensely investigated, the role of membrane phospholipid composition has largely been ignored, and structural studies of native membranes have been hampered by their complex and disordered nature. We show for the first time that the structure of fungal membranes derived from Pichia pastoris yeast depends on the degree of lipid polyunsaturation, which has an impact on the structural consequences of AmB activity. AmB inserts in yeast membranes even in the absence of ergosterol, and forms an extra-membraneous layer whose thickness is resolved to be 4-5 nm. In ergosterol-containing membranes, AmB insertion is accompanied by ergosterol extraction into this layer. The AmB-sponge mediated depletion of ergosterol from P. pastoris membranes gives rise to a significant membrane thinning effect that depends on the degree of lipid polyunsaturation. The resulting hydrophobic mismatch is likely to interfere with a much broader range of membrane protein functions than those directly involving ergosterol, and suggests that polyunsaturated lipids could boost the efficiency of AmB. Furthermore, a low degree of lipid polyunsaturation leads to least AmB insertion and may protect host cells against the toxic effects of AmB. These results provide a new framework based on lipid composition and membrane structure through which we can understand its antifungal action and develop better treatments.