Lipid monolayers at an air-water interface can be compressed laterally and reach high surface density. Beyond a certain threshold, they become unstable and collapse. Lipid monolayer collapse plays an important role in the regulation of surface tension at the air-liquid interface in the lungs. Although the structures of lipid aggregates formed upon collapse can be characterized experimentally, the mechanism leading to these structures is not fully understood. We investigate the molecular mechanism of monolayer collapse using molecular dynamics simulations. Upon lateral compression, the collapse begins with buckling of the monolayer, followed by folding of the buckle into a bilayer in the water phase. Folding leads to an increase in the monolayer surface tension, which reaches the equilibrium spreading value. Immediately after their formation, the bilayer folds have a flat semielliptical shape, in agreement with theoretical predictions. The folds undergo further transformation and form either flat circular bilayers or vesicles. The transformation pathway depends on macroscopic parameters of the system: the bending modulus, the line tension at the monolayer-bilayer connection, and the line tension at the bilayer perimeter. These parameters are determined by the system composition and temperature. Coexistence of the monolayer with lipid aggregates is favorable at lower tensions of the monolayerbilayer connection. Transformation into a vesicle reduces the energy of the fold perimeter and is facilitated for softer bilayers, e.g., those with a higher content of unsaturated lipids, or at higher temperatures.lung surfactant ͉ bilayer reservoir ͉ course grain ͉ vesicle budding ͉ molecular dynamics L ipid molecules are insoluble in both polar and apolar media because of their amphipathic nature. At polar-apolar interfaces, they form monomolecular films that reduce the surface tension. Lipid monolayers form the main structural component (Ϸ97% by weight) of lung surfactant at the gas-exchange interface in the lung alveoli (1) and constitute the outer layer of tear film in the eyes (2). The properties of lipid monolayers vary with their surface density (3). For example, the higher the density, the lower is the resulting surface tension at the interface. At a certain very high surface density, however, a further reduction of the surface tension is not possible: the monolayers become unstable at the interface and collapse (4) (see scheme in Fig. 1). Besides being of fundamental interest for surface science, lipid monolayer collapse is crucial for maintaining low surface tension at the gas-exchange interface in the lungs during breathing (5).Collapse is characterized by loss of material from the interface and can proceed through different pathways. The modes of collapse and the surface tension at which collapse occurs depend on the molecular composition of the monolayer and on temperature (6-13), which determine the morphology and material properties of the monolayer. Although lipid monolayers in the liquid state do not usually ...