The pore-forming alpha-toxin from Staphylococcus aureus is secreted as a soluble monomeric protein. In order to form a transmembrane channel, the protein has to undergo oligomerization and membrane insertion. Previous studies have shown that channel formation is favored by acidic pH. We have analyzed the effect of pH on the kinetics of channel formation as well as on the conformation of the toxin. Using a variety of spectroscopic probes for protein structure, we have shown that alpha-toxin unfolded upon acidification and that the unfolding process occurred in at least three steps. The various steps could be selectively affected by modifying the salt concentration or the temperature. This unfolding was, however, only partial as the secondary structure remained native-like as witnessed by far UV CD measurements. The first unfolding step, corresponding to a region of the C-terminal half of the toxin, is of particular importance as it coincided with the exposure of hydrophobic patches on the surface of the protein as well as with the onset of channel formation. Our observations strongly suggest that transition of the C-terminal half of alpha-toxin to a molten globule-like state is required for channel formation.