Most land-living organisms regularly experience dehydration. In nature, one commonly applied strategy to protect against this osmotic stress is to introduce small polar molecules with low vapor pressure, commonly called osmolytes. Two examples of naturally occurring small polar compounds are urea and trimethylamine N-oxide (TMAO), which are known to have counteracting effects on protein stability. In this work, we investigate the effects of urea and TMAO on lipid self-assembly at varying water contents, focusing on dehydrated conditions. By using complementary experimental techniques, including sorption microcalorimetry, NMR, and X-ray scattering, together with molecular dynamics simulations in model systems composed of phosphatidylcholine lipids, water, and solute, we characterize interactions and self-assembly over a large range of hydration conditions. It is shown that urea and TMAO show qualitatively similar effects on lipid self-assembly at high water contents, whereas they have clearly different effects in dehydrated conditions. The latter can be explained by differences in the molecular interactions between the solutes and the lipid headgroups. TMAO is repelled from the bilayer interface, and it is thereby expelled from lipid lamellar systems with low water contents and narrow inter-bilayer regions. In these conditions, TMAO shows no effect on the lipid phase behavior. Urea, on the other hand, shows a slight affinity for the lipid headgroup layer, and it is present in the lipid lamellar system at all water contents. As a result, urea may exchange with water in dry conditions and thereby prevent dehydration-induced phase transitions. In nature, urea and TMAO are sometimes found together in the same organisms and it is possible that their combined effect is to both protect lipid membranes against dehydration and still avoid denaturation of proteins.