The self-assembly of the amphiphilic lipopeptide PAEPKI-C16 (P = proline, A = alanine, E = glutamic acid, K = lysine, I = isoleucine, and C16 = hexadecyl) was investigated using a combination of microscopy, spectroscopy, and scattering methods and compared to that of C16-IKPEAP with the same (reversed) peptide sequence and the alkyl chain positioned at the N-terminus and lacking a free N-terminal proline residue. The catalytic activity of these peptides was then compared using a model aldol reaction system. For PAEPKI-C16, the cryo-TEM images showed the formation of micrometer-length fibers, which by small-angle X-ray scattering (SAXS) were found to have radii of 2.5-2.6 nm. Spectroscopic analysis shows that these fibers are built from β-sheets. This behavior is in complete contrast to that of C16-IKPEAP, which forms spherical micelles with peptides in a disordered conformation [ Hutchinson et al. J. Phys. Chem. B 2019, 123, 613 ]. In PAEPKI-C16, spontaneous alignment of fibers was observed upon increasing pH, which was accompanied by observed birefringence and anisotropy of SAXS patterns. This shows the ability to form a nematic phase, and unprecedented nematic hydrogel formation was also observed for these lipopeptides at sufficiently high concentrations. SAXS shows retention of an ultrafine (1.7 nm core radius) fibrillar network within the hydrogel. PAEPKI-C16 with free N-terminal proline shows enhanced anti:syn diastereoselectivity and better conversion compared to C16-IKPEAP. The cytotoxicity of PAEPKI-C16 was also lower than that of C16-IKPEAP for both fibroblast and cancer cell lines. These results highlight the sensitivity of lipopeptide properties to the presence of a free proline residue. The spontaneous nematic phase formation by PAEPKI-C16 points to the high anisotropy of its ultrafine fibrillar structure, and the formation of such a phase at low concentrations in aqueous solution may be valuable for future applications.