Saposin C (Sap C) is a small glycoprotein required for hydrolysis of glucosylceramidase in lysosomes. The full activity of glucosylceramidase requires the presence of both Sap C and acidic phospholipids. Interaction between Sap C and acidic phospholipid-containing membranes, a crucial step for enzyme activation, is not fully understood. In this study, the dynamic process of Sap C interaction with acidic phospholipid-containing membranes was investigated in aqueous buffer using atomic force microscopy. Sap C induced two types of membrane restructuring: formation of patch-like structural domains and the occurrence of membrane destabilization. The former caused thickness increase whereas the latter caused thickness reduction in the gel-phase membrane bilayer, possibly as a result of lipid loss or an interdigitating process. Patch-like domain formation was independent of acidic phospholipids, whereas membrane destabilization is dependent on the presence and concentration of acidic phospholipids. Sap C effects on membrane restructuring were further studied using synthetic peptides. Synthetic peptides corresponding to the amphipathic alpha-helical domains 1 (designated "H1 peptide") and 2 (H2 peptide) of Sap C were used. Our results indicated that H2 contributed to domain formation but not to membrane destabilization, whereas H1 induced neither type of membrane restructuring. However, H1 was able to mimic Sap C's destabilization effect in conjunction with H2, but only when H1 was present first and H2 was added afterwards. This study provides an approach to investigate the structure-function aspects of Sap C interaction with phospholipid membranes, with insights into the mechanism(s) of Sap C-membrane interaction.