One of the reasons that Python is awesome is that there is a package for almost anything you can imagine. For example, if you are handling text files of large sizes, then it is good idea to store them in a compressed format, like bzip2 for example.
It is easy to read in the lines of such a text file compressed using bzip2 in Python using the bz2 package:
import bz2 bz_file = bz2.BZ2File("foo.txt.bz2") line_list = bz_file.readlines()
Tried with: Python 2.7.3 and Ubuntu 12.04 LTS