Complexes of cationic lipids with negatively charged biological polyelectrolytes such as DNA and proteins have elicited much interest recently because of their potential applications in gene delivery and in developing novel biomolecular materials. We report on the structure of complexes made from the anionic polypeptide poly-L-glutamic acid (PGA) and a positively charged lipid mixture consisting of the cationic lipid didodecyl dimethylammonium bromide (DDAB) and the neutral lipid dilauroyl-sn-glycero phosphocholine (DLPC). Small-angle X-ray scattering (SAXS), small angle neutron scattering (SANS), and optical microscopy of the complexes are consistent with a condensed multilamellar structure with PGA macromolecules sandwiched between the bilayers of the lipids. At the isoelectric point of the complex, lipid dilution experiments at increasing ratios of the neutral lipid to the cationic lipid resulted in an unexpectedly large increase in the interlamellar "d" spacing from 39 Angstrom for the pure DDAB membrane to 60 Angstrom at very high dilutions. Significantly, SAXS data shows that the lamellar complexes remained single phase which indicates that PGA interchain interactions are repulsive with their average spacing increasing with increasing lipid dilution. The data are consistent with a model of a "pinched lamellar" phase of the lipid-PGA complex where the PGA macromolecule and DDAB associate to form localized pinched regions. Between PGA-membrane "pinches" large pockets of water stabilized by hydration repulsion are contained and the system behaves as a nearly pure DLPC membrane with a large equilibrium spacing of 60 Angstrom. These results suggest that biologically active molecules could be incorporated in the large hydration domains between "pinched" regions for delivery applications.