Rat red blood cells will hemolyze if they are present in vitro in mixtures of rat liver microsomes in which lipid peroxidation has been initiated by NADPH. Recent work from this laboratory indicated that a toxic factor not having radical properties could be generated from the lipids of the peroxidizing microsomes. This toxic factor produced prelytic damage in rat red blood cells. In this communication we show that if Ca(++)-aggregated microsomes are first peroxidized and then sedimented by centrifugation, the resuspended peroxidized microsomes are capable of hemolyzing red cells in the absence of any further microsomal lipid peroxidation. This result shows conclusively that the microsomal lipid peroxidation step can be separated from the attack on red cells leading to frank hemolysis. Furthermore, lipids extracted from the peroxidized microsomes with chloroform-methanol account quantitatively for the degree of hemolysis produced. The active hemolytic material could not be detected in resuspended microsomal centrifugates obtained during the first 10 minutes of NADPH-stimulated microsomal lipid peroxidation. It appeared rapidly after 10 minutes. It was maximal at 20 minutes, and fell to a low level of activity by 60 minutes. Peak hemolytic activity correlated with peak generation of lipid soluble peroxides. High, but less than maximal levels of peroxides appearing at 10 minutes did not cause hemolysis, and high, but less than maximal levels remaining at 60 minutes were only weakly hemolytic. The extracted lipoidal material with hemolytic potency is more reactive than hydrogen peroxide in a peroxide assay.