The biologically relevant conformation of substance P is likely to be dictated by the lipid milieu wherein the hormone would interact with its receptor. Assuming that specific constraints to the hormone structure may be imparted by its interaction with Ca2+ ions in the low dielectric lipid medium, the interaction of substance P and its inactive analog, Ala7-substance P, has been characterized in a lipid-mimetic solvent. Circular dichroism (CD) and NMR spectral methods were employed to study the conformation of the free and Ca2+-bound forms of the peptides and the conformational changes that occur on Ca2+ binding. The results show that both peptides assume a helical structure in the non-polar solvent used, a mixture of acetonitrile and trifluoroethanol. The N-terminal region is, however, less ordered in the analog peptide compared with the native hormone. Ca2+ addition causes significant conformational changes in both the peptides. However, while substance P binds two Ca2+ ions in a cooperative manner, Ala7-substance P binds only one Ca2+ ion with a relatively weaker affinity. Computations of the minimum-energy conformations of the free and Ca2+-bound peptides were performed using interproton distances derived from nuclear Overhauser enhancement spectra of the two peptides, as well as the information provided by changes in proton chemical shifts caused by Ca2+ addition. Taken together, the results of this study suggest that differences in the interaction of substance P and Ala7-substance P with Ca2+ in the non-polar milieu, which in turn leads to differences in their Ca2+-bound conformations, may be the basis for the differences in their biological potencies.