alpha-Haemolysin is an extracellular protein toxin (approximately 107 kDa) secreted by Escherichia coli that acts at the level of the plasma membranes of target eukaryotic cells. The nature of the toxin interaction with the membrane is not known at present, although it has been established that receptor-mediated binding is not essential. In this work, we have studied the perturbation produced by purified alpha-haemolysin on pure phosphatidylcholine bilayers in the form of large unilamellar vesicles, under conditions in which the toxin has been shown to induce vesicle leakage. The bilayer systems containing bound protein have been examined by differential scanning calorimetry, fluorescence spectroscopy, differential solubilization by Triton X-114, and freeze-fracture electron microscopy. All the data concur in indicating that alpha-haemolysin, under conditions leading to cell lysis, becomes inserted in the target membrane in the way of intrinsic or integral proteins. In addition, the experimental results support the idea that inserted alpha-haemolysin occupies only one of the membrane phospholipid monolayers, i.e. it is not a transmembrane protein. The experimental data are complemented by structure prediction studies according to which as many as ten amphipathic alpha-helices, appropriate for protein-lipid interaction, but no hydrophobic transmembrane helices are predicted in alpha-haemolysin. These observations and predictions have important consequences for the mechanism of cell lysis by alpha-haemolysin; in particular, a non-transmembrane arrangement of the toxin in the target membrane is not compatible with the concept of alpha-haemolysin as a pore-forming toxin.