Yeast cytochrome c (cyt c) was modified at cysteine-102 with a thiol-specific spin label and its interaction with liposomes containing acidic phospholipids was studied by electron paramagnetic resonance (EPR) spectroscopy. Association of cyt c with liposomes resulted in a significant reduction in the mobility of the spin label and a fraction of cyt c even seemed to be immobilized. Based on a large spectral change upon binding and the proximity of the spin-label to lysine-86 and -87, we propose these two residues to be the potential binding site at neutral pH. The interaction is electrostatic in nature because the spectral changes were reversed by addition of anions. Dissociation of the bound cyt c by anions, however, became less effective as the lipid/protein ratio increased. This suggests a repulsive lateral interaction among the bound cyt c. Unlabeled cyt c molecules added to preformed cyt c-liposome complex displaced the bound (spin labeled) cyt c and the process was competitive and reversible.