Gene therapy aims to provide an alternative method for treating a wide range of diseases by correcting, replacing, or silencing defective genes. Synthetic lipid vectors composed of cationic lipids that self-assemble with DNA form safe, efficient, and versatile gene delivery vehicles. Attachment of polyethylene glycol (PEG) chains to the outer lipid headgroups provides particles with steric stabilization and “stealth” but also inhibits cell-nanoparticle interactions. Attaching peptides to the distal ends of the PEG chains recovers interactions by facilitating binding to cell receptors for targeted delivery. Because the hydration repulsion layer on the surface of lipid membranes creates a hurdle for transfection efficiency, understanding the importance of neutral phospholipids and their role in hydration of targeted nanoparticles is key to optimization. However, because PEGylation inhibits membrane interactions with nanoparticles, we expect the effect of hydration to be reduced relative to non-PEGylated particles. In this study, we reduced the hydration repulsion layer by substituting in neutral lipids with smaller headgroups (e.g. phosphatidylethanolamine vs. phosphatidylcholine). Flow cytometry, fluorescence microscopy, and biological assays were used to measure cellular uptake and binding, endosomal escape, and transfection efficiency of different nanoparticle formulations. Preliminary results show the substitution of phosphatidylethanolamine does create a small effect in binding, uptake, and transfection efficiency, providing more information about their ability to fuse with the cell membrane and deliver genetic material.