Staphylococcal alpha-toxin is a single-chain polypeptide with a molecular weight of 34,000 that hexamerizes in lipid bilayers to form pores of 1-1.5 nm effective diameter in membranes. We demonstrate that limited proteolysis of purified alpha-toxin with proteinase K generates a hemolytically active product that yields one major protein band of 17-18 kDa in SDS-polyacrylamide gel electrophoresis. The 17-18-kDa protein band harbors two major fragments of similar size representing the N- and C-terminal halves, which remain associated with each other in non-denaturing buffers but dissociate in 6 M urea. Dissociation in urea leads to loss of hemolytic activity. In contrast, unnicked alpha-toxin is not inactivated by urea. Nicked, hemolytically active alpha-toxin forms hexamers on erythrocyte membranes and on lymphocytes and monocytes. However, the nicked toxin can only lyse erythrocytes and fails to permeabilize nucleated cells. Osmotic protection experiments indicate that the size of pores generated by the nicked toxin is considerably smaller (0.6-0.9 nm effective diameter) than that generated by native toxin. The collective results do not support a previous proposal that different functions of alpha-toxin are contained in separate domains of the molecule.