The competition for water between an aqueous lipid phase (L2) and gelatinizing starch was investigated. Differential scanning calorimetry and light microscopy were used to study the gelatinization behaviour of cassava and potato starch in the thermodynamically stable water containing (i.e. 13% w/w water) oil-continuous L2-phase. This was compared to the gelatinization of the two starches in limited and excess water (i.e. 56 and 77% w/w water). The heating of 10.0% w/w cassava and potato starch in the L2-phase resulted in a 20° shift upwards in temperature for the onset temperature and the temperature of peak maximum of the starch gelatinization compared with the starch-water samples with limited or excess water. Results from the microscopy study showed that heating a gradually increasing amount of starch in the L2-phase shifts the gelatinization interval to increasingly higher temperatures. The enthalpy of gelatinization was reduced with >50% when the 10.0% w/w cassava and potato starch were gelatinized in the L2-phase. This is due to that part of the water is associated to the lipids in the L2-phase in such a way that it is not available for the starch. X-ray diffraction examinations of the cassava starch showed that the diffraction pattern was of the A-type. When the water content was increased the pattern changed towards the C-type.