The emission intensity of the fluorophore nitrobenzoxadiazoledipalmitoylphosphatidylethanolamine (NBD-PE) is sensitive to local environmental structure when this species is used as a component of a phospholipid membrane. The physical and electrostatic structure of a membrane may be modulated by selective chemical reactions, and the resulting alteration in fluorescence intensity provides transduction of such selective chemical processes. One example is the reaction between the extrinsic membrane-associated enzyme acetylcholinesterase (AChE) and the substrate acetylcholine (ACh), which produces an increase in hydronium ion activity at the surface of a lipid membrane. A mechanism of transduction of the enzymatic reaction by lipid monolayer membranes was investigated by spectrofluorimetric methods and fluorescence microscopy. Mixed monolayers composed of dipalmitoylphosphatidylcholine (DPPC) and dipalmitoylphosphatidic acid (DPPA) which contained 30 mol-% or more of DPPA and 1 mol-% of NBD-PE provided transduction of the AChEACh reaction. Reaction of micromolar concentrations of ACh with AChE-monolayer systems induced increases in fluorescence intensity of up to 50%. Direct observation of the microscopic structure of lipid monolayers on a time scale of minutes showed that the reaction did not drastically affect the distribution of coexisting microscopic phase domains that were present in the monolayers The fluorescence imaging and spectroscopic results did indicate that massive structural reorganization at a molecular level probably occurred in a period of seconds. The results are consistent with an electrostatic mechanism of perturbation of the structure of the monolayer in which local pH gradients associated with the reaction of AChE with substrate altered the extent of ionization of DPPA in the headgroup zone of the membrane.