Membrane protein function is generally regulated by the molecular composition of the host lipid bilayer. The underlying mechanisms have long remained enigmatic. Some cases involve specific molecular interactions, but very often lipids and other amphiphiles, which are adsorbed to lipid bilayers, regulate a number of structurally unrelated proteins in an apparently non-specific manner. It is well known that changes in the physical properties of a lipid bilayer (e.g., thickness or monolayer spontaneous curvature) can affect the function of an embedded protein. However, the role of such changes, in the general regulation of membrane protein function, is unclear. This is to a large extent due to lack of a generally accepted framework in which to understand the many observations. The present review summarizes studies which have demonstrated that the hydrophobic interactions between a membrane protein and the host lipid bilayer provide an energetic coupling, whereby protein function can be regulated by the bilayer elasticity. The feasibility of this ‘hydrophobic coupling mechanism’ has been demonstrated using the gramicidin channel, a model membrane protein, in planar lipid bilayers. Using voltage-dependent sodium channels, N-type calcium channels and GABAA receptors, it has been shown that membrane protein function in living cells can be regulated by amphiphile induced changes in bilayer elasticity. Using the gramicidin channel as a molecular force transducer, a nanotechnology to measure the elastic properties experienced by an embedded protein has been developed. A theoretical and technological framework, to study the regulation of membrane protein function by lipid bilayer elasticity, has been established.