The saturation transfer electron spin resonance (STESR) spectra of spin-labeled phosphatidylcholine have been used to follow the kinetics of conversion from the gel phase to the sub-gel phase in aqueous bilayers of dipalmitoyl phosphatidylcholine. This is a simple, well-defined model system for lipid domain formation in membranes. The integrated intensity of the STESR spectrum from the chain-labeled lipid first increases and then decreases with time of incubation in the gel phase at 0 degrees C. The first, more rapid phase of the kinetics is attributed to the conversion of germ nuclei to growth nuclei of the sub-gel phase. The increase in STESR intensity corresponds to the reduction in chain mobility of spin labels located in the gel phase at the boundaries of the growth nuclei and correlates with the increase in the diagnostic STESR line height ratios over this time range. The second, slower phase of the kinetics is attributed to growth of the domains of the sub-gel phase. The decrease in STESR intensity over this time regime corresponds to exclusion of the spin-labeled lipids from the tightly packed sub-gel phase and correlates quantitatively with calibrations of the spin label concentration dependence of the STESR intensity in the gel phase. The kinetics of formation of the sub-gel phase are consistent with the classical model for domain formation and growth. At 0 degrees C, the half-time for conversion of germ nuclei to growth nuclei is approximately 7.7 h and domain growth of the sub-gel phase is characterized by a rate constant of 0.025 h(-1). The temperature dependence of the STESR spectra from samples annealed at 0 degrees C suggests that the subtransition takes place via dissolution of sub-gel phase domains, possibly accompanied by domain fission.