The aberrant assembly of peptides and proteins into fibrillar aggregates proceeds through oligomeric intermediates that are thought to be the primary pathogenic species in many protein deposition diseases. We describe two types of oligomers formed by the HypF-N protein that are morphologically and tinctorially similar, as detected with atomic force microscopy and thioflavin T assays, though one is benign when added to cell cultures whereas the other is toxic. Structural investigation at a residue-specific level using site-directed labeling with pyrene indicated differences in the packing of the hydrophobic interactions between adjacent protein molecules in the oligomers. The lower degree of hydrophobic packing was found to correlate with a higher ability to penetrate the cell membrane and cause an influx of Ca(2+) ions. Our findings suggest that structural flexibility and hydrophobic exposure are primary determinants of the ability of oligomeric assemblies to cause cellular dysfunction and its consequences, such as neurodegeneration.