Reduced streptolysin O, a toxin produced by certain beta-haemolytic streptococci, lyses human erythrocytes. The reaction is inhibited by cholesterol at concentrations of about 1.0mug/ml. Other sterols inhibit the lysin and there is a specific requirement for a 3beta-hydroxyl group. Inhibition was obtained with 3beta-hydroxychol-5-en-24-oic acid, containing a hydrophilic group at C-24. The mode of inhibition is likely to involve attachment to the fixation site of the lysin which attaches the molecule to cell membranes, probably to membrane cholesterol. A second streptolysin site, concerned in the final haemolytic event, may also be involved. Inhibitors of the latter site have not been characterized, other than antibody with specificity for the site.