Molecular dynamics (MD) simulations of dipalmitoylphosphatidylcholine bilayers composed of 72 and 288 lipids are used to examine system size dependence on dynamical properties associated with the particle mesh Ewald (PME) treatment of electrostatic interactions. The lateral diffusion constant Dl is 2.92 x 10(-7) and 0.95 x 10(-7) cm2/s for 72 and 288 lipids, respectively. This dramatic finite size effect originates from the correlation length of lipid diffusion, which extends to next-nearest neighbors in the 288 lipid system. Consequently, diffusional events in smaller systems can propagate across the boundaries of the periodic box. The internal dynamics of lipids calculated from the PME simulations are independent of the system size. Specifically, reorientational correlation functions for the slowly relaxing phosphorus-glycerol hydrogen, phosphorus-nitrogen vectors, and more rapidly relaxing CH vectors in the aliphatic chains are equivalent for the 72 and 288 lipid simulations. A third MD simulation of a bilayer with 72 lipids using spherical force-shift electrostatic cutoffs resulted in interdigitated chains, thereby rendering this cutoff method inappropriate.