Storage of neem (Azadirachta indica) seeds is difficult because of their sensitivity to chilling stress at moisture contents (MC) 10␘r imbibitional stress below 10␖C. The hypothesis was tested that an elevated gel-to-liquid crystalline phase transition temperature (Tm) of membranes is responsible for this storage behaviour. To this end a spin probe technique, Fourier transform infrared microspectroscopy, and electron microscopy were used. The in situ Tm of hydrated membranes was between 10 °C and 15 °C, coinciding with the critical minimum temperature for germination. During storage, viability of fresh embryos was lost within two weeks at 5 °C, but remained high at 25 °C. The loss of viability coincided with an increased leakage of K from the embryos upon imbibition and with an increased proportion of cells with injured plasma membranes. Freeze–fracture replicas of plasma membranes from chilled, hydrated axes showed lateral phase separation and signs of the inverted hexagonal phase. Dehydrated embryos were sensitive to soaking in water, particularly at low temperatures, but fresh embryos were not. After soaking dry embryos at 5 °C (4 h) plus 1 d of further incubation at 25 °C, the axis cells were structurally disorganized and did not become turgid. In contrast, cells had a healthy appearance and were turgid after soaking at 35 °C. Imbibitional stress was associated with the loss of plasma membrane integrity in a limited number of cells, which expanded during further incubation of the embryos at 25 °C. It is suggested that the injuries brought about by storage or imbibition at sub-optimal temperatures in tropical seeds whose membranes have a high intrinsic Tm (10–15 °C), are caused by gel phase formation.