A study of the lysis of rabbit erythrocytes by streptolysin O (SO) revealed at least two steps in the hemolytic process. The initial interaction between SO and erythrocytes is the adsorption of the toxin molecule to the cell surface. Adsorption occurred at 4 C and was independent of ionic strength and pH; these results suggest that hydrophobic interactions between SO and the cell may be important in this process. Cholesterol was shown to prevent the adsorption of toxin to the cell, and it is proposed that cholesterol in the red cell membrane may be the site of toxin adsorption. The concept of a lipid attachment site is supported by the findings that proteolytic enzymes and sulfhydryl inhibitors known to affect external erythrocyte proteins did not affect SO hemolysis. Although the number of toxin molecules that will adsorb to a cell is limited, more than one toxin molecule was required for hemolysis. The step(s) following adsorption was dependent on temperature, ionic strength, and pH. Thus, it is evident that this step(s) is readily separable from adsorption, suggesting that an ionic interaction occurs between toxin and an erythrocyte membrane molecule. The step(s) following adsorption was also inhibited by divalent cations. Since N-ethyl maleimide will also inhibit lysis after toxin adsorption, it is possible that divalent cations may prevent SO hemolysis by reacting with free sulfhydryl groups on the toxin molecule.