The cytolytic and haemolytic activity of Serratia marcescens is determined by the ShlA protein, which is secreted across the outer membrane with the aid of the ShlB protein. In the absence of ShlB, inactive ShlA* remains in the periplasm of Escherichia col transformed with an shlA-encoding plasmid, which indicates that ShlB converts ShlA* to active ShlA. ShlA* in a periplasmic extract and partially purified ShlA* were activated in vitro by partially purified ShlB. When both proteins were highly purified, ShlA* was only activated by ShlB when phosphatidylethanolamine (PE) or phosphatidylserine was added to the assay, while phosphatidylglycerol contributed little to ShlA* activation. Lyso-PE, cardiolipin, phosphatidylcholine, phosphatidic acid, lipopolysaccharide and various detergents could not substitute for PE. Although radioactively labelled PE was so tightly associated with ShlA that it remained bound to ShlA after heating and SDS-PAGE, it was not covalently linked to ShlA as PE could be removed by thin-layer chromatography with organic solvents. The number of PE molecules associated per molecule of ShlA was 3.9 +/- 2.2. Active ShlA was inactivated by treatment with phospholipase A2, which indicated that PE is also required for ShlA activity. ShlA-255 (containing the 255 N-terminal amino acids of ShlA) reversibly complemented ShlA* to active ShlA and was inactivated by phospholipase A2, which demonstrated that PE binds to the N-terminal portion of ShlA; this region has previously been found to be involved in ShlA secretion and activation. Electrospray mass spectroscopy of ShlA-255 determined a molar mass that corresponded to that of unmodified ShlA-255. An E. coli mutant that synthesized only minute amounts of PE did not secrete ShlA but contained residual cell-bound haemolytic activity. Since PE binds strongly to ShlA* in the absence of ShlB without converting ShlA* to haemolytic ShlA, ShlB presumably imposes a conformation on ShlA that brings PE into a position to mediate interaction of the hydrophilic haemolysin with the lipid bilayer of the eukaryotic membrane.