In this article, we provide direct evidence for 1-D micellar growth and the formation of a network structure in an aqueous system of poly(oxyethylene) cholesteryl ether (ChEO(20)) and lauryl diethanolamide (L-02) by rheometry, small-angle X-ray scattering (SAXS), and cryo-transmission electron microscopy (cryo-TEM). The ChEO(20) self-assembles into spheroid micelles above the critical micelle concentration and undergoes a 1-D microstructural transition upon the incorporation of L-02, which because of its lipophilic nature tends to be solubilized into the micellar palisade layer and reduces the micellar curvature. The elongated micelles entangle with each other, forming network structures of wormlike micelles, and the system shows viscoelastic properties, which could be described by the Maxwell model. A peak observed in the zero-shear viscosity (η(0)) versus L-02 concentration curve shifted toward higher L-02 concentrations and the value of maximum viscosity (η(0 max)) increased with the increasing ChEO(20) mixing fraction with water. We observed that η(0 max) increased by 2 to 4 orders of magnitude as a function of the ChEO(20) concentration. The Maxwell relaxation time (τ(R)) shows a maximum value at a concentration corresponding to η(0 max) (i.e., τ(R) increases with L-02 concentration and then decreases after attaining a maximum value, whereas the plateau modulus (G(0)) shows monotonous growth). These observations demonstrate microstructural transitions in two different modes: L-02 first induces 1-D micellar growth and as a result the viscosity increases, and finally after the system attains its maximum viscosity, L-02 causes branching in the network structures. The microstructure transitions are confirmed by SAXS and cryo-TEM techniques.