Lymphotoxin (LT or TNF-beta), a T cell-derived lymphokine with partial homology to TNF-alpha, was found to bind to dimyristoylphosphatidylcholine vesicles in a pH-dependent manner: binding increased with decreasing pH. Binding was not limited to surface association with phospholipid head groups because studies with a photoreactive membrane-restricted probe revealed protein penetration of the hydrocarbon core of the bilayer. Intramembranous photolabeling of the trimeric form of LT demonstrated maintenance of quaternary structure upon bilayer insertion. The efficiency of insertion was greatly enhanced with gel-phase bilayers compared with fluid phase bilayers even though the binding efficiency was much lower. Hence, binding and insertion represent two distinct physical processes. Intrinsic fluorescence and dye binding assays showed that the acid-facilitated membrane interactions stemmed from acid-induced changes in protein conformation. The acquisition of hydrophobic characteristics through these conformational changes supplies a physical explanation for LT conversion from a water-soluble form to a membrane-embedded structure. Moreover, the use of vesicle-embedded LT to prepare planar bilayers vs the addition of soluble LT subsequent to bilayer formation demonstrated that LT exhibits channel activity and that low pH-induced membrane insertion precedes and is distinct from expression of voltage-dependent ion gating. LT's ability to associate intimately with lipid vesicles and form ion channels mirrors the behavior of TNF-alpha. Thus, although LT and TNF-alpha are secreted by different cell types, the conservation of membrane binding, insertion, and channel-forming activities suggests a functional role in response induction.