Aqueous extracts of the edible mushroom, Pleurotus ostreatus, contain a substance that is lytic in vitro for mammalian erythrocytes. The hemolytic agent, pleurotolysin, was purified to homogeneity and found to be a protein lacking seven of the amino acids commonly found in proteins. In the presence of sodium dodecyl sulfate it exists a monomers of molecular weight 12 050 whereas under non-dissociating conditions it appears to exist as dimers. It is isoelectric at about pH 6.4. The sensitivity of erythrocytes from different animals correlates with sphingomyelin content of the erythrocyte membranes. Sheep erythrocyte membranes inhibit pleurotolysin-induced hemolysis and the inhibition is time and temperature dependent. Ability of membranes to inhibit hemolysis is abolished by prior treatment of membranes with specific phospholipases. Pleurotolysin-induced hemolysis is inhibited by liposomes prepared from cholesterol, dicetyl phosphate and sphingomyelin derived from sheep erythrocytes whereas a variety of other lipid preparations fail to inhibit. It is concluded that sphingomyelin plays a key role in the hemolytic reaction.