Streptolysin O belongs to the class of thiol-activated toxins, which are single chain, four-domain proteins that bind to membranes containing cholesterol and then assemble to form large oligomeric pores. Membrane binding involves a conserved tryptophan-rich sequence motif located within the C-terminally located domain 4. In contrast, sites involved in oligomerization and pore formation have been assigned to domains 1 and 3, respectively. We here examined the functional properties of domain 4, which was recombinantly expressed with an N-terminal histidine tag for purification and an additional cysteine residue for covalent labeling. The fluorescently labeled fragment readily bound to membranes, but it did not form oligomers nor lyse cell membranes. Moreover, the labeled fragment did not detectably become incorporated into hybrid oligomers when combined with lytically active full-length toxin. However, when present in large excess over the active toxin, the domain 4 fragment effected reduction of hemolytic activity and of functional pore size, which indicates interference with oligomerization of the lytically active species. Our findings support the notion that domain 4 of the streptolysin O molecule may fold autonomously, is essential for membrane binding and is capable not of irreversible but of reversible association with the entire toxin molecule.