Perfringolysin O (-toxin) is a pore-forming cytolysin whose activity is triggered by binding to cholesterol in the plasma membrane. The cholesterol binding activity is predominantly localized in the -sheet-rich C-terminal half. In order to determine the roles of the C-terminal amino acids in -toxin conformation and activity, mutants were constructed by truncation of the C terminus. While the mutant with a two-amino acid C-terminal truncation retains full activity and has similar structural features to native -toxin, truncation of three amino acids causes a 40% decrease in hemolytic activity due to the reduction in cholesterol binding activity with a slight change in its higher order structure. Furthermore, both mutants were found to be poor at in vitro refolding after denaturation in 6 M guanidine hydrochloride, resulting in a dramatic reduction in cholesterol binding and hemolytic activities. These activity losses were accompanied by a slight decrease in -sheet content. A mutant toxin with a five-amino acid truncation expressed in Escherichia coli is recovered as a further truncated form lacking the C-terminal 21 amino residues. The product retains neither cholesterol binding nor hemolytic activities and shows a highly disordered structure as detected by alterations in the circular dichroism and tryptophan fluorescence spectra. These results show that the C-terminal region of -toxin has two distinct roles; the last 21 amino acids are involved to maintain an ordered overall structure, and in addition, the last two amino acids at the C-terminal end are needed for protein folding in vitro, in order to produce the necessary conformation for optimal cholesterol binding and hemolytic activities.