Nonhemolytic Escherichia coli were outnumbered by hemolytic E. coli within 24 h after being inoculated in a mixed culture at an initial ratio of 200 nonhemolytic to 1 hemolytic organism. The hemolytic strain was found to produce a cell-free, filterable substance which causes lysis of nonhemolytic E. coli B when grown in liquid cultures but not when grown on agar plates. The bacteriolysin is inactivated by boiling, by freezing and thawing, and by incubation with trypsin. The inability to inhibit growth on an agar plate, dependence on cell concentration for its effect, lysis of the sensitive cells, and appearance of phage particles in the cell lysates suggest that this substance is not like colicins or microcins previously described. After lysis of E. coli B, bacteriophage particles were visible in transmission electron micrographs of material pelleted by ultracentrifugation. However, no bacteriophage were observed in pellets from the bacteriolysin-containing supernatants before lysis of E. coli B. Failure to find bacteriophage in these preparations, and the fact that some bacteriolysin activity remains in the supernatant solution after centrifugation at 150,000 X g for 6.5 h, indicate that the bacteriolysin is not itself a bacteriophage. Exposure of E. coli B to UV light and mitomycin C did not induce production of a temperate phage. The properties of this system, in which a cell-free substance produced by one strain of bacteria causes lysis of another strain, appear to differ from those of the various types of bacteriocins and bacteriophages described to date.