An account is given of the current status of theoretical modeling of the phase equilibria in lipid membranes with intrinsic proteins. Special attention is paid to the description of lateral phase separation, which is important for membrane function since it may lead to biologically differentiated regions. We discuss in particular the mattressmodel approach by Mouritsen and Bloom (37), who take matching between protein and lipid hydrophobic thicknesses as a determining factor for the phase behavior. The model has been developed in the framework of phenomenological thermodynamics solution theory. The predictions of the theory are compared to a variety of experimental measurements, including those of membrane recombinants of the protein content of the reaction center and antenna protein of the bacterial photosynthetic apparatus as well as the erythrocyte band 3 protein. The physical effects of lipid-protein interactions are contrasted to those of lipid-cholesterol interactions. The concept of hydrophobic matching is then used as a basis for discussing a possible relationship between membrane thickness and physiological function.