Simulations based on dissipative particle dynamics are performed to investigate the solubilization mechanism of vesicles by surfactants. Surfactants tend to partition themselves between vesicle and the bulk solution. It is found that only surfactants with suitable hydrophobicity are able to solubilize vesicles by forming small mixed micelles. Surfactants with inadequate hydrophobicity tend to stay in the bulk solution and only a few of them enter into the vesicle. Consequently, the vesicle structure remains intact for all surfactant concentrations studied. On the contrary, surfactants with excessive hydrophobicity are inclined to incorporate with the vesicle and thus the vesicle size continues to grow as the surfactant concentration increases. Instead of forming discrete mixed micelles, lipid and surfactant are associated into large aggregates taking the shapes of cylinders, donuts, bilayers, etc. For addition of surfactant with moderate hydrophobicity, perforated vesicles are observed before the formation of mixed micelles and thus the solubilization mechanism is more intricate than the well-known three-stage hypothesis. As the apparent critical micellar concentration (φ(s,v)(a,CMC)) is attained, pure surfactant micelles form and the vesicle deforms because the distribution of surfactant within the bilayer is no longer uniform. When the surfactant concentration reaches φ(s,v)(p), the vesicle perforates. The extent of perforation grows with increasing surfactant concentration. The solubilization process begins at φ(s,v) (sol), and lipids leave the vesicle and join surfactant micelles to form mixed micelles. Eventually, total collapse of the vesicle is observed. In general, one has φ(s,v)(a,CMC)≤φ(s,v)(p)≤φ(s,v)(sol).