A quantitative study of the specific inhibitory power of cholesterol and other sterols on the hemolytic properties of streptolysin O is reported. This streptococcal exocellular protein is a cytolytic toxin which disrupts cytoplasmic membranes of eukaryote cells. The structural characteristics, particularly the stereochemical ones required for a steroid molecule to inhibit the cytolytic activity of streptolysin O, have been investigated in detail. By immunodiffusion techniques, in agar gel plates or tubes containing sterols, the formation of hydrophobic complexes between streptolysin O and inhibitory steroids, but not non-inhibitory steroids except lanosterol, is shown. Upon interaction with inhibitory steroids streptolysin O loses its immunoreactive properties towards neutralizing and precipitating homologous antibodies. An interpretation of the mechanism of biomembrane disorganization by streptolysin O is discussed in the light of its steroid binding properties.