PEGylation of protein and peptide drugs is frequently used to improve in vivo efficacy. We investigated the action mechanism of tachyplesin I, a membrane-acting cyclic antimicrobial peptide from Tachypleus tridentatus and the effects of PEGylation on the mechanism. The PEGylated peptide induced the leakage of calcein from egg yolk L-alpha-phosphatidylglycerol/egg yolk L-alpha-phosphatidylcholine large unilamellar vesicles similarly to the parent peptide. Both peptides induced lipid flip-flop coupled to leakage and was translocated into the inner leaflet of the bilayer, indicating that tachyplesin I forms a toroidal pore and that PEGylation did not alter the basic mechanism of membrane permeabilization of the parent peptide. Despite their similar activities against model membranes, the peptides showed very different biological activities. The cytotoxicity of tachyplesin I was greatly reduced by PEGylation, although the antimicrobial activity was significantly weakened. We investigated the enhancement of the permeability of inner membranes induced by the peptides. Our results suggested that outer membranes and peptidoglycan layers play an inhibitory role in the permeation of the PEG moiety. Furthermore, a reduction in DNA binding by PEGylation may also contribute to the weak activity of the PEGylated peptide.