Mycobacterium ulcerans produces an extracellular cutaneous infection (Buruli ulcer) characterized by immunosuppression. This is in stark contrast to all other pathogenic Mycobacteria species that cause intracellular, granulomatous infections. The unique mycobacterial pathology of M. ulcerans infection is attributed to a plasmid-encoded immunomodulatory macrolide toxin, mycolactone. In this article we explore the role of mycolactone in the virulence of M. ulcerans using mycolactone and genetically defined mycolactone negative mutants. In a guinea pig infection model wild-type (WT) M. ulcerans produces an extracellular infection whereas mycolactone negative mutants produce an intracellular inflammatory infection similar to that of Mycobacterium marinum. Although mycolactone negative mutants are avirulent, they persist for at least 6 weeks. Chemical complementation of M. ulcerans mutants with mycolactone restores WT M. ulcerans pathology. Mycolactone negative mutants are capable of growth within macrophages in vitro whereas macrophages are killed by WT M. ulcerans. The ability of mycolactone to caused delayed cell death via apoptosis has been reported. However, mycolactone also causes cell death via necrosis. In vitro mycolactone has antiphagocytic properties. Neither WT M. ulcerans nor mycolactone negative strains are strong neutrophil attractants. These results suggest that mycolactone is largely responsible for the unique pathology produced by M. ulcerans.