The constitutively expressed AcrAB multidrug efflux system of Escherichia coli shows a high degree of homology with the normally silent AcrEF system. Exposure of a strain with acrAB deleted to antibiotic selection pressure frequently leads to the insertion sequence-mediated activation of the homologous AcrEF system. In this study, we used strains constitutively expressing either AcrAB or AcrEF from their normal chromosomal locations to resolve a controversy about whether phenylalanylarginine β-naphthylamide (PAβN) inhibits the activities of AcrAB and AcrEF and/or acts synergistically with antibiotics by destabilizing the outer membrane permeability barrier. Real-time efflux assays allowed a clear distinction between the efflux pump-inhibiting activity of PAβN and the outer membrane-destabilizing action of polymyxin B nonapeptide (PMXBN). When added in equal amounts, PAβN, but not PMXBN, strongly inhibited the efflux activities of both AcrAB and AcrEF pumps. In contrast, when outer membrane destabilization was assessed by the nitrocefin hydrolysis assay, PMXBN exerted a much greater damaging effect than PAβN. Strong action of PAβN in inhibiting efflux activity compared to its weak action in destabilizing the outer membrane permeability barrier suggests that PAβN acts mainly by inhibiting efflux pumps. We concluded that at low concentrations, PAβN acts specifically as an inhibitor of both AcrAB and AcrEF efflux pumps; however, at high concentrations, PAβN in the efflux-proficient background not only inhibits efflux pump activity but also destabilizes the membrane. The effects of PAβN on membrane integrity are compounded in cells unable to extrude PAβN. The increase in multidrug-resistant bacterial pathogens at an alarming rate has accelerated the need for implementation of better antimicrobial stewardship, discovery of new antibiotics, and deeper understanding of the mechanism of drug resistance. The work carried out in this study highlights the importance of employing real-time fluorescence-based assays in differentiating multidrug efflux-inhibitory and outer membrane-destabilizing activities of antibacterial compounds.