The interpretation of electrical phenomena in biomembranes is usually based on the assumption that the experimentally found discrete ion conduction events are due to a particular class of proteins called ion channels while the lipid membrane is considered being an inert electrical insulator. The particular protein structure is thought to be related to ion specificity, specific recognition of drugs by receptors and to macroscopic phenomena as nerve pulse propagation. However, lipid membranes in their chain melting regime are known to be highly permeable to ions, water and small molecules, and are therefore not always inert. In voltage-clamp experiments one finds quantized conduction events through protein-free membranes in their melting regime similar to or even undistinguishable from those attributed to proteins. This constitutes a conceptual problem for the interpretation of electrophysiological data obtained from biological membrane preparations. Here, we review the experimental evidence for lipid ion channels, their properties and the physical chemistry underlying their creation. We introduce into the thermodynamic theory of membrane fluctuations from which the lipid channels originate. Furthermore, we demonstrate how the appearance of lipid channels can be influenced by the alteration of the thermodynamic variables (e.g., temperature, pressure, tension and chemical potentials) in a coherent description that is free of parameters. This description leads to pores that display dwell times closely coupled to the fluctuation lifetimevia the fluctuation–dissipation theorem. Drugs as anesthetics and neurotransmitters are shown to influence the channel likelihood and their lifetimes in a predictable manner. We also discuss the role of proteins in influencing the likelihood of lipid channel formation.