Lipid oxidation, discoloration, loss of amine groups and pyrrolization of the liposome systems of cuttlefish (Sepia pharaonis) in the presence of FeCl3 and ascorbic acid were studied. Thiobarbituric acid-reactive substances (TBARS) and the b∗-value of cuttlefish liposomes increased with a coincidental decrease in amine groups when the incubation temperatures (0, 4, 25, and 37 °C) and incubation times (0–24 h) were increased (p < 0.05). As lipid oxidation and yellow pigment formation in the cuttlefish liposome proceeded, a loss of amine groups and pyrrolization were also detected. The effects of FeCl3 and ascorbic acid, at different concentrations, on TBARS production, b∗-value, loss of amine groups and pyrrolization of cuttlefish liposome were also investigated. Both FeCl3 and ascorbic acid showed prooxidative effects in cuttlefish liposome in a concentration-dependent manner. Sodium chloride (0–2%) reduced TBARS, b∗-values and pyrrole compounds. These results suggest a positive correlation between lipid oxidation and the development of yellow pigments in cuttlefish phospholipids.