The peptide hormone, calcitonin, which is associated with medullary carcinoma of the thyroid, has a marked tendency to form amyloid fibrils and may be a useful model in probing the role of peptide-membrane interactions in beta-sheet and amyloid formation and amyloid neurotoxicity. Using bovine calcitonin, we found that, like other amyloids, the peptide was toxic only when in a beta-sheet-rich, amyloid form, but was non-toxic, when it lacked an amyloid structure. We found that the peptide bound with significant affinity to membranes that contained either cholesterol and gangliosides. In addition, incubation of calcitonin with cholesterol-rich and ganglioside-containing membranes resulted in significant changes in peptide structure yielding a peptide enriched in beta-sheet and amyloid content. Because the cholesterol- and ganglioside-rich phospholipid systems enhanced the calcitonin beta-sheet and amyloid contents, and peptide amyloid content was associated with neurotoxicity, we then investigated whether depleting cellular cholesterol and gangliosides affected calcitonin neurotoxicity. We found that cholesterol and ganglioside removal significantly reduced the calcitonin-induced PC12 cell neurotoxicity. Similar results have been observed with other amyloid-forming peptides such as beta-amyloid (A beta) of Alzheimer's disease and suggest that modulation of membrane composition and peptide-membrane interactions may prove useful in the control of amyloid formation and amyloid neurotoxicity.