Mycoplasma pneumoniae is the leading cause of bacterial community-acquired pneumonia among hospitalized children in the United States. It is also responsible for a spectrum of other respiratory tract disorders and extrapulmonary manifestations in children and adults. The main virulence factor of M. pneumoniae is a 591 amino acid multifunctional protein called Community Acquired Respiratory Distress Syndrome (CARDS) toxin. The amino terminal region of CARDS toxin (N-CARDS) retains ADP-ribosylating activity and the carboxy region (C-CARDS) contains the receptor binding and vacuolating activities. After internalization, CARDS toxin is transported in a retrograde manner from endosome through the Golgi complex into the endoplasmic reticulum. However, the mechanisms and criteria by which internalized CARDS toxin is transported and activated to execute its cytotoxic effects remain unknown. In this study, we used full-length CARDS toxin and its mutant and truncated derivatives to analyze how pharmacological drugs that alter pH of intracellular vesicles and electrical potential across vesicular membranes affect translocation of CARDS toxin in mammalian cells. Our results indicate that an acidic environment is essential for CARDS toxin retrograde transport to endoplasmic reticulum. Moreover, retrograde transport facilitates toxin clipping and is required to induce vacuole formation. Additionally, toxin-mediated cell vacuolation is strictly dependent on the function of vacuolar type-ATPase.