Antimicrobial peptides are one of the most promising classes of antibiotic agents for drug-resistant bacteria. Although the mechanisms of their action are not fully understood, many of them are found to interact with the target bacterial membrane, causing different degrees of perturbations. In this work, we directly observed that a short peptide disturbs membranes by inducing lateral segregation of lipids without forming pores or destroying membranes. Aurein 1.2 (aurein) is a 13-amino acid antimicrobial peptide discovered in the frog Litoria genus that exhibits high antibiotic efficacy. Being cationic and amphiphilic, it binds spontaneously to a membrane surface with or without charged lipids. With a small-angle neutron scattering contrast matching technique that is sensitive to lateral heterogeneity in membrane, we found that aurein induces significant lateral segregation in an initially uniform lipid bilayer composed of zwitterionic lipid and anionic lipid. More intriguingly, the lateral segregation was similar to the domain formed below the order-disorder phase-transition temperature. To our knowledge, this is the first direct observation of lateral segregation caused by a peptide. With quasi-elastic neutron scattering, we indeed found that the lipid lateral motion in the fluid phase was reduced even at low aurein concentrations. The reduced lateral mobility makes the membrane prone to additional stresses and defects that change membrane properties and impede membrane-related biological processes. Our results provide insights into how a short peptide kills bacteria at low concentrations without forming pores or destroying membranes. With a better understanding of the interaction, more effective and economically antimicrobial peptides may be designed.