The in vitro and cytolytic properties of the hemolysin of group B streptococcus (GBS) were investigated using sheep erythrocytes and McCoy cells adapted for growth in a serum-deficient medium. The relationship between the hemolysin, various carrier molecules and phospholipids was examined. Starch-based carriers interfered with the inhibitory activity of phospholipids and solvents for the phospholipids reduced the activity of the hemolysin. These technical problems were resolved by use of an albumin-based carrier, a strain producing large amounts of hemolysin and sonication of the phospholipid. The hemolysin was cytolytic for McCoy cells and this activity and its hemolytic action on sheep erythrocytes were inhibited by a number of phospholipid components of surfactant. It is possible that GBS hemolysin has a direct or indirect role in the pathogenesis of the pneumonitis of early onset GBS infection.