Cleavage of the rotavirus spike protein, VP4, is required for rotavirus-induced membrane permeability and viral entry into cells. The VP5* cleavage product selectively permeabilizes membranes and liposomes and contains an internal hydrophobic domain that is required for membrane permeability. Here we investigate VP5* domains (residues 248 to 474) that direct membrane binding. We determined that expressed VP5 fragments containing residues 248 to 474 or 265 to 474, including the internal hydrophobic domain, bind to cellular membranes but are not present in Triton X-100-resistant membrane rafts. Expressed VP5 partitions into aqueous but not detergent phases of Triton X-114, suggesting that VP5 is not integrally inserted into membranes. Since high-salt or alkaline conditions eluted VP5 from membranes, our findings demonstrate that VP5 is peripherally associated with membranes. Interestingly, mutagenesis of residue 394 (W-->R) within the VP5 hydrophobic domain, which abolishes VP5-directed permeability, had no effect on VP5's peripheral membrane association. In contrast, deletion of N-terminal VP5 residues (residues 265 to 279) abolished VP5 binding to membranes. Alanine mutagenesis of two positively charged residues within this domain (residues 274R and 276K) dramatically reduced (>95%) binding of VP5 to membranes and suggested their potential interaction with polar head groups of the lipid bilayer. Mutations in either the VP5 hydrophobic or basic domain blocked VP5-directed permeability of cells. These findings indicate that there are at least two discrete domains within VP5* required for pore formation: an N-terminal basic domain that permits VP5* to peripherally associate with membranes and an internal hydrophobic domain that is essential for altering membrane permeability. These results provide a fundamental understanding of interactions between VP5* and the membrane, which are required for rotavirus entry.