Streptococcus pyogenes, or group A Streptococcus (GAS), is a human bacterial pathogen that can manifest as a range of diseases from pharyngitis and impetigo to severe outcomes such as necrotizing fasciitis and toxic shock syndrome. GAS disease remains a global health burden with cases estimated at over 700 million annually and over half a million deaths due to severe infections(1). For over 100 years, a clinical hallmark of diagnosis has been the appearance of complete (beta) haemolysis when grown in the presence of blood. This activity is due to the production of a small peptide toxin by GAS known as streptolysin S. Although it has been widely held that streptolysin S exerts its lytic activity through membrane disruption, its exact mode of action has remained unknown. Here, we show, using high-resolution live cell imaging, that streptolysin S induces a dramatic osmotic change in red blood cells, leading to cell lysis. This osmotic change was characterized by the rapid influx of Cl(-) ions into the red blood cells through SLS-mediated disruption of the major erythrocyte anion exchange protein, band 3. Chemical inhibition of band 3 function significantly reduced the haemolytic activity of streptolysin S, and dramatically reduced the pathology in an in vivo skin model of GAS infection. These results provide key insights into the mechanism of streptolysin S-mediated haemolysis and have implications for the development of treatments against GAS.