GM1-ganglioside receptor binding by the B subunit of cholera toxin (CtxB) is widely accepted to initiate toxin action by triggering uptake and delivery of the toxin A subunit into cells. More recently, GM1 binding by isolated CtxB, or the related B subunit of Escherichia coli heat-labile enterotoxin (EtxB), has been found to modulate leukocyte function, resulting in the down-regulation of proinflammatory immune responses that cause autoimmune disorders such as rheumatoid arthritis and diabetes. Here, we demonstrate that GM1 binding, contrary to expectation, is not sufficient to initiate toxin action. We report the engineering and crystallographic structure of a mutant cholera toxin, with a His to Ala substitution in the B subunit at position 57. Whereas the mutant retained pentameric stability and high affinity binding to GM1-ganglioside, it had lost its immunomodulatory activity and, when part of the holotoxin complex, exhibited ablated toxicity. The implications of these findings on the mode of action of cholera toxin are discussed.