Molecular dynamics simulations have been used to study the phase behavior of a dipalmitoylphosphatidylcholine (DPPC)/palmitic acid (PA)/water 1:2:20 mixture in atomic detail. Starting from a random solution of DPPC and PA in water, the system adopts either a gel phase at temperatures below approximately 330 K or an inverted hexagonal phase above approximately 330 K in good agreement with experiment. It has also been possible to observe the direct transformation from a gel to an inverted hexagonal phase at elevated temperature (approximately 390 K). During this transformation, a metastable fluid lamellar intermediate is observed. Interlamellar connections or stalks form spontaneously on a nanosecond time scale and subsequently elongate, leading to the formation of an inverted hexagonal phase. This work opens the possibility of studying in detail how the formation of nonlamellar phases is affected by lipid composition and (fusion) peptides and, thus, is an important step toward understanding related biological processes, such as membrane fusion.