We present a systematic investigation and analysis of the structure and stability of reverse micelle systems with the addition of NH4OH, ZrOCl2, and Al(NO3)3 salts. We demonstrate that the reverse micelle size decreases with increasing salt additions until one reaches a critical concentration, which characterizes the onset of system destabilization. The concept of an electrical double layer, as it applies to reverse micelles, is considered for explaining features of destabilization, including the initial decrease in reverse micelle size, the destabilization concentration, and the effect of cation valence. We propose that the reduction in size prior to instability is caused by compression of the reverse micelle electrical double layers, as higher concentrations of salts are present. The reduced thickness of the electrical double layers allows the decaying potentials to move into closer proximity to each other before generating enough repulsion to balance the forces for reverse micelle formation and form a new equilibrium average reverse micelle size. The point of reverse micelle instability has been related to the formation of a two-phase system as a result of the inability to further compress the salt co-ions in the core of the reverse micelles, which would cause an excessive repulsive force between the overlapping potentials. We have extracted a critical potential of −89 nV between the two overlapping potentials for the AOT/water/isooctane (ω0 = 10) systems studied. All these effects have important implications for the preparation of nanopowders by reverse micelle synthesis. If the reverse micelles are unstable before the precipitates are formed, then the advantage of reverse micelle synthesis is immediately lost.