The neurodegenerative illness Familial Danish Dementia (FDD) is linked to formation and aggregation of the 34-residue ADan peptide, whose cytotoxicity may be mediated by membrane interactions. Here we characterize the derived peptide SerADan, in which the two cysteines found in ADan have been changed to serines to emulate the reduced peptide. SerADan aggregates rapidly at pH 5.0 and 7.5 in a series of conformational transitions to form beta-sheet rich fibril-like structures, which nevertheless do not bind amyloid-specific dyes, probably due to the absence of organized beta-sheet contacts. Aggregation is prevented at neutral/acidic pH and low ionic strength by anionic lipid vesicles. These vesicles are permeabilized by monomeric SerADan assembling on the membrane to form stable beta-sheet structures which are different from the solution aggregates. In contrast, solution ageing of SerADan first reduces and then abolishes permeabilization properties. The competition between lipid binding and aggregation may reflect bifurcating pathways for the ADan peptide in vivo between accumulation of inert aggregates and formation of cytotoxic permeabilizing species. Our work demonstrates that non-fibrillar aggregates can assemble in a series of steps to form a hierarchy of higher-order assemblies, where rapid formation of stable local beta-sheet structure may prevent rearrangement to amyloid proper.