Phosphatidylcholine (PC) has been widely used in place of naturally occurring phosphatidylethanolamine (PE) in reconstitution of bacterial membrane proteins. However, PC does not support native structure or function for several reconstituted transport proteins. Lactose permease (LacY) of Escherichia coli, when reconstituted in E. coli phospholipids, exhibits energy-dependent uphill and energy-independent downhill transport function and proper conformation of periplasmic domain P7, which is tightly linked to uphill transport function. LacY expressed in cells lacking PE and containing only anionic phospholipids exhibits only downhill transport and lacks native P7 conformation. Reconstitution of LacY in the presence of E. coli-derived PE, but not dioleoyl-PC, results in uphill transport. We now show that LacY exhibits uphill transport and native conformation of P7 when expressed in a mutant of E. coli in which PC completely replaces PE even though the structure is not completely native. E. coli-derived PC and synthetic PC species containing at least one saturated fatty acid also support the native conformation of P7 dependent on the presence of anionic phospholipids. Our results demonstrate that the different effects of PE and PC species on LacY structure and function cannot be explained by differences in the direct interaction of the lipid head groups with specific amino acid residues alone but are due to more complex effects of the physical and chemical properties of the lipid environment on protein structure. This conclusion is supported by the effect of different lipids on the proper folding of domain P7, which indirectly influences uphill transport function.