Escherichia coli hemolysin is secreted as a water-soluble polypeptide of Mr 107,000. After binding to target erythrocytes, the membrane-bound toxin resembled an integral membrane protein in that it was refractory towards extraction with salt solutions of low ionic strength. Toxin-induced hemolysis could be totally inhibited by addition of 30 mM dextran 4 (mean Mr, 4,000; molecular diameter approximately 3 nm) to the extracellular medium. Uncharged molecules of smaller size (e.g., sucrose, with a molecular diameter of 0.9 nm, or raffinose, with a molecular diameter of 1.2 to 1.3 nm) did not afford such protection. Treatment of erythrocytes suspended in dextran-containing buffer with the toxin induced rapid efflux of cellular K+ and influx of 45Ca2+, as well as influx of [14C]mannitol and [3H]sucrose. [3H]inulin only slowly permeated into toxin-treated cells, and [3H]dextran uptake was virtually nil. Membranes lysed with high doses of E. coli hemolysin exhibited no recognizable ultrastructural lesions when examined by negative-staining electron microscopy. Sucrose density gradient centrifugation of deoxycholate-solubilized target membranes led to recovery of the toxin exclusively in monomer form. Incubation of toxin-treated cells with trypsin caused limited proteolysis with the generation of membrane-bound, toxin-derived polypeptides of Mr approximately 80,000 without destroying the functional pore. We suggest that E. coli hemolysin may damage cell membranes by partial insertion into the lipid bilayer and generation of a discrete, hydrophilic transmembrane pore with an effective diameter of approximately 3 nm. In contrast to the structured pores generated by cytolysins of gram-positive bacteria such as staphylococcal alpha-toxin and streptolysin O, pore formation by E. coli hemolysin may be caused by the insertion of toxin monomers into the target lipid bilayers.