Secretory phospholipase A2 (PLA2) is a ubiquitous water-soluble enzyme found in venom, pancreatic, and cancerous fluid. It is also known to play a role in membrane remodeling processes as well as in cellular signaling cascades. PLA2 is interfacially active and functions mainly on organized types of substrate, e.g. micelles and lipid bilayers. Hence the activity of the enzyme is modulated by the lateral organization and the physical properties of the substrate, in particular the structure in the nanometer range. The evidence for nano-scale structure and lipid domains in bilayers is briefly reviewed. Results obtained from a variety of experimental and theoretical studies of PLA2 activity on lipid-bilayer substrates are then presented which provide insight into the biophysical mechanisms of PLA2 activation on lipid bilayers and liposomes of different composition. The insight into these mechanisms has been used to propose a novel principle for liposomal drug targeting, release, and absorption triggered by secretory PLA2.