We present a molecular-level theory for lipid-protein interaction and apply it to the study of lipid-mediated interactions between proteins and the protein-induced transition from the planar bilayer ( L α ) to the inverse-hexagonal ( H II) phase. The proteins are treated as rigid, membrane-spanning, hydrophobic inclusions of different size and shape, e.g., “cylinder-like,” “barrel-like,” or “vase-like.” We assume strong hydrophobic coupling between the protein and its neighbor lipids. This means that, if necessary, the flexible lipid chains surrounding the protein will stretch, compress, and/or tilt to bridge the hydrophobic thickness mismatch between the protein and the unperturbed bilayer. The system free energy is expressed as an integral over local molecular contributions, the latter accounting for interheadgroup repulsion, hydrocarbon-water surface energy, and chain stretching-tilting effects. We show that the molecular interaction constants are intimately related to familiar elastic (continuum) characteristics of the membrane, such as the bending rigidity and spontaneous curvature, as well as to the less familiar tilt modulus. The equilibrium configuration of the membrane is determined by minimizing the free energy functional, subject to boundary conditions dictated by the size, shape, and spatial distribution of inclusions. A similar procedure is used to calculate the free energy and structure of peptide-free and peptide-rich hexagonal phases. Two degrees of freedom are involved in the variational minimization procedure: the local length and local tilt angle of the lipid chains. The inclusion of chain tilt is particularly important for studying noncylindrical (for instance, barrel-like) inclusions and analyzing the structure of the H II lipid phase; e.g., we find that chain tilt relaxation implies strong faceting of the lipid monolayers in the hexagonal phase. Consistent with experiment, we find that only short peptides (large negative mismatch) can induce the L α → H II transition. At the transition, a peptide-poor L α phase coexists with a peptide-rich H II phase.