The solubilization of hydrocortisone (HC) in lamellar liquid crystals (LC) containing monoglyceride laurate (MGL) and water was studied. The maximum capacity of the 70:30 (wt/wt) MGL/water system to solubilize HC has been found to be larger than any other reported solubilization system (such as microemulsions and micelles), and exceeded 1.0 wt%. The systems were tested by polarized light microscopy, small angle X-ray diffraction, differential scanning calorimetry and deuterium NMR. It was found that the addition of HC caused no change in the interplanar spacing of the system, and had no effect on the gel-to-LC transition temperature. However, the solubilization enlarged the quadrupole splitting of the water deuteron. These results suggest that the HC molecules are positioned in the vicinity of, or within, the polar head groups of the monoglyceride.