Prolonged usage of nonsteroidal anti-inflammatory drugs (NSAIDs) causes gastrointestinal injury. Bile acids and phospholipids have been shown to exasperate and attenuate NSAIDs' toxicity, respectively. However, the molecular mechanisms underlying these effects remain undetermined. We have investigated the molecular interactions in various mixtures of indomethacin (Indo), a commonly used NSAID, and cholic acid (CA), a bile acid, in the presence and absence of palmitoyloleylphosphatidylcholine (POPC) lipids. We found that CA and Indo spontaneously form mixed micelles, with the hydrophobic face of CA and hydrophobic region of Indo forming the core. Increasing the Indo concentration resulted in more stable and larger aggregates that contain a progressively larger number of Indo molecules. More dynamic aggregates with a maximum size of 15 were obtained when the relative concentration of CA was higher. The mixture of CA, Indo, and POPC also led to ternary mixed micelles in which CA and Indo distribute almost uniformly on the surface such that intra-CA, intra-Indo, and CA/Indo interactions are minimized. A number of previous reports have shown that Indo perforates the cell membrane in the presence of bile acids (e.g., Petruzzelli et al., (2006) Dig. Dis. Sci., 51, 766-774). We propose that this may be related to the stable, highly charged, large CA/Indo binary micelles observed in our simulations. Similarly, the diminished ability of the CA/Indo mixture to aggregate in the presence of POPC may partly explain the lower toxicity of PC-conjugated NSAIDs.