The effect of the bacterial cytolytic toxin, streptolysin O (SLO), on rabbit erythrocyte membranes, liposomes, and lipid dispersions was examined. SLO produced no gross alterations in the major erythrocyte membrane proteins or lipids. However, when erythrocytes were treated with SLO and examined by electron microscopy, rings and "C"-shaped structures were observed in the cell membrane. The rings had an electron-dense center, 24 nm in diameter, and the overall diameter of the structure was 38 nm. Ring formation also occurred when erythrocyte membranes were fixed with glutaraldehyde and OsO4 before the addition of toxin. In contrast, rings were not seen when erythrocytes were treated with toxin at 0 degrees C, indicating that adsorption of SLO to the membrane is not sufficient for ring formation since toxin is known to bind to erythrocytes at that temperature. The ring structures were present on lecithin-cholesterol-dicetylphosphate liposomes after SLO treatment, but there was no release of the trapped, internal markers, K2CrO4 or glucose. The crucial role of cholesterol in the formation of rings and C's was demonstrated by the fact that these structures were present in toxin-treated cholesterol dispersions, but not in lecithin-dicetylphosphate dispersions nor in the SLO preparations alone. The importance of cholesterol was also shown by the finding that no rings were present in membranes or cholesterol dispersions which had been treated with digitonin before SLO was added. Although rings do not appear to be "holes" in the membrane, a model is proposed which suggests that cholesterol molecules are sequestered during ring and C-structure formation, and that this process plays a role in SLO-induced hemolysis.

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