Dimethylsulfoxide (DMSO) is an aprotic solvent that has the ability to induce cell fusion and cell differentiation and enhance the permeability of lipid membranes. It is also an effective cryoprotectant. Insights into how this molecule modulates membrane structure and function would be invaluable toward regulating the above processes and for developing chemical means for enhancing or hindering the absorption of biologically active molecules, in particular into or via the skin. We show here by means of molecular simulations that DMSO can induce water pores in dipalmitoyl-phosphatidylcholine bilayers and propose this to be a possible pathway for the enhancement of penetration of actives through lipid membranes. DMSO also causes the membrane to become floppier, which would enhance permeability, facilitate membrane fusion, and enable the cell membrane to accommodate osmotic and mechanical stresses during cryopreservation.