We have studied the binding and interaction of the peptide E1(FP) with various model membranes. E1(FP) is derived from the amino acid segment 274-291 of the hepatitis C virus envelope glycoprotein E1, which was previously proposed to host the peptide responsible for fusion to target membranes. In the present study we addressed the changes which take place upon E1(FP) binding in both the peptide and the phospholipid bilayer, respectively, through a series of complementary experiments. We show that peptide E1(FP) binds to and interacts with phospholipid model membranes, modulates the polymorphic phase behavior of membrane phospholipids, is localized in a shallow position in the membrane and interacts preferentially with cholesterol. The capability of modifying the biophysical properties of model membranes supports its role in HCV-mediated membrane fusion and suggests that the mechanism of membrane fusion elicited by class I and II fusion proteins might be similar.