The influence of water concentrations on phase transformations of a surfactant/co-surfactant/water system is investigated by using all atom molecular dynamics simulations. At higher water concentrations, where surfactant (behenyl trimethyl ammonium chloride, BTMAC) to co-surfactant (stearyl alcohol, SA) ratio is fixed, BTMAC and SA self-assemble into spherical micelles, which transform into strongly interdigitated one dimensional rippled lamellar phases upon decreasing water concentrations. Fragmentation or fusions of spherical micelles of different sizes are evident from the radial distribution functions at different temperatures. However, at lower water concentrations rippled lamellar phase transforms into an LβI phase upon heating. Our simulations reveal that the concentrations of water can influence available space around the head groups which couple with critical thickness to accommodate the packing fraction required for respective phases. This directs towards obtaining a controlling factor to design desired phases important for industrial and medical applications in the future. © 2016 Elsevier B.V.