Oligomerization is a necessary step in channel formation by the bacterial toxin aerolysin. We have identified a region of aerolysin containing two tryptophans which influence the ability of the protein to oligomerize. Changing the tryptophan at position 371 or 373 to leucine resulted in mutant proteins that oligomerized at much lower concentrations than the wild-type toxin. Near-ultraviolet circular dichroism measurements showed that the tertiary structures of the L-371 and L-373 mutant toxins may be slightly different from the structure of wild type. Other single amino acid replacements in the same region of the protein as the two tryptophans appeared to have little or no effect on any properties of the protein. None of the changes we made had any measured effect on secretion of the protein by the bacteria. The L-373 and L-371 proteins induced chloride release from liposomes at lower concentrations than native toxin. Wild-type aerolysin solutions were completely unable to cause release when oligomeric toxin was absent or when it was removed by centrifugation. Aerolysin changed at H-132, which cannot form oligomers, was also inactive against liposomes. We conclude that aerolysin channels are produced by direct insertion of oligomers formed in solution, or assembled on the surface of the cell after binding to the receptor, and not by lateral diffusion of the monomer after it enters the lipid bilayer.