Interactions between dipalmitoylphosphatidylcholine (DPPC) and dipalmitoylphosphatidylserine (DPPS), combined both as binary lipid bilayer assemblies and separately, under the influence of divalent Mg2+, a membrane bilayer fusogenic agent, are reported. Infrared vibrational spectroscopic analyses of the lipid acyl chain methylene symmetric stretching modes indicate that aggregates of the two phospholipid components exist as domains heterogeneously distributed throughout the binary bilayer system. In the presence of Mg2+ DPPS maintains an ordered orthorhombic subcell gel phase structure through the phase transition temperature, while the DPPC component is only minimally perturbed with respect to the gel to liquid crystalline phase change. The addition of Mg2+ induces a reorganization of the lipid domains in which the gel phase acyl chain planes rearrange from a hexagonal configuration toward a triclinic, parallel chain subcell. Examination of the acyl chain methylene deformation modes at low temperatures allows a determination of DPPS microdomain sizes, which decrease upon the addition of DPPC-d(62) in the absence of Mg2+. On adding Mg2+, a uniform DPPS domain size is observed in the binary mixtures, In either the presence or absence of Mg2+, DPPC-d(62) aggregates remain in a configuration for which microdomain sizes are not spectroscopically measurable. Analysis of the acyl chain methylene deformation modes for DPPC-d(62) in the binary system suggests that clusters of the deuterated lipids are distributed throughout the DPPS matrix. Light scattering and fluorescence measurements indicate that Mg2+ induces both the aggregation and the fusion of the lipid assemblies as a function of the ratio of DPPS to DPPC. The structural reorganizations of the lipid microdomains within the DPPS-DPPC bilayer are interpreted in the context of current concepts regarding lipid bilayer fusion.