The effect of enzymatic generation of ceramide on phase separated bilayers with a mixture of co-existing fluid and liquid-ordered phases has been examined using a combination of atomic force microscopy (AFM) and fluorescence imaging. Supported lipid bilayers prepared from a DOPC/sphingomyelin/cholesterol mixture were imaged prior to, during and after incubation with sphingomyelinase by total internal reflection fluorescence (TIRF) microscopy. Enzyme treatment resulted in the growth of large dye-excluded regions. The growth kinetics for these patches are consistent with activity of a variable number of enzyme molecules in different regions of the bilayer. Correlated AFM and fluorescence imaging shows that some of the large dye-excluded patches form around the original liquid-ordered domains, which become heterogeneous in height with many raised ceramide-rich regions around their periphery. However, some of the dye-excluded patches correspond to areas of the bilayer where the initial domains have largely or partially disappeared. The dye-excluded patches observed by fluorescence are shown to be areas of increased adhesion in lateral deflection AFM images and are postulated to form by incorporation of both cholesterol and ceramide in the original fluid phase and to vary in composition throughout the bilayer. This is evident from the observation that the dye-excluded areas are all detected as areas of increased friction, but do not always show a distinct height difference in topographic images. These results highlight the utility of a multi-modal imaging approach for understanding the complex membrane restructuring that occurs upon enzymatic generation of ceramide. (C) 2009 Elsevier Inc. All rights reserved.