Hemolysin of Escherichia coli is activated by fatty acylation of the protoxin, directed by the putative acyl transferase HlyC and by acyl carrier protein (ACP). Mass spectrometry and Edman degradation of proteolytic products from mature toxin activated in vitro with tritium-labeled acylACP revealed two fatty-acylated internal lysine residues, lysine 564 and lysine 690. Resistance of the acylation to chemical treatments suggested that fatty acid was amide linked. Substitution of the two lysines confirmed that they were the only sites of acylation and showed that although each was acylated in the absence of the other, both sites were required for in vivo toxin activity.