While the phenomenon of excipient mediated membrane fusion has been studied widely, the inherent role of interfacial hydration involved in the process has mostly remained unaddressed. Here we report the experimental validation of the fact that PEG-induced membrane fusion is associated with the dehydration of the membrane(s). We explore the explicit hydration behavior at three different lipids (DOPC, POPC and DPPC) membranes with different aliphatic tails as they undergo fusogenic transition in the presence of PEG of average molecular weight of 4000 using THz-FTIR spectroscopy in the frequency window of 1.5–13.5 THz. Dynamic light scattering and electron microscopic measurements confirm the formation of different intermediate steps of the liposomes during the fusion process: bilayer aggregation, destabilization and finally lipid fusion. We observe that membrane hydration follows a systematic trend with the lipid specificity as the fusion process sets in.