The main gel-fluid phase transition of wet lipid bilayers is examined in terms of a microscopic interaction model which incorporates both trans-gauche isomerism of the lipid acyl chains and crystal orientation variables for the lipid molecules. The model gives two scenarios for the phase behavior of wet lipid bilayers in terms of temperature: (i) chain melting occurs at a higher temperature than crystallization, or (ii) chain melting and crystallization occur at the same temperature. Experimental data for lipid bilayers is consistent with the second scenario. In this case, computer simulation is used to investigate the non-equilibrium behaviour of the model. The numerical data is intepreted in terms of interfacial melting on heating and grain formation on cooling through the main phase transition. Interfacial melting is a non-equilibrium process in which the grains of a polycrystalline bilayer melt inwards from the boundaries. The prediction of interfacial melting in wet lipid bilayers is examined in relation to data from both equilibrium and nonequilibrium measurements, to corresponding phase behavior in monolayers, and to previous theoretical work.