The ability of streptolysin S preparations to induce high percentages of transformation in human peripheral blood lymphocytes was confirmed in a series of apparently healthy donors. Transforming activity was not demonstrated in the two media used for streptolysin S production, nor in control preparations in which a strain each of Streptococcus viridans, Staphylococcus aureus (nonhemolytic), and Diplococcus pneumoniae was substituted for the beta hemolytic streptococcal strain used for streptolysin S production. The relation of the hemolytic activity to the lymphocyte transforming activity of streptolysin S preparations was studied by means of inactivation and fractionation experiments. Heating produced a loss in both activities, but more in the hemolytic than in the transforming activity. The transformation obtained with a heated preparation had a high degree of correlation with that obtained with the unheated preparation in a series of normal subjects and patients with various rheumatic diseases, whose lymphocytes were often less responsive to stimulation with streptolysin S preparations (both heated and unheated) than the lymphocytes of the normal subjects studied. Treatment of streptolysin S preparations with chymotrypsin, vegetable lecithin, or trypan blue (the latter in minute amounts) resulted in preparations with no detectable hemolytic activity but with undiminished lymphocyte transforming activity. Chromatographic fractionations on DEAE-Sephadex columns yielded fractions endowed with transforming but not with hemolytic activity, and other fractions endowed with hemolytic but not with transforming activity. The recovery of the hemolytic activity was not complete and quantitation of the recovery of the transforming activity was not attempted. These experiments indicate that the hemolytic and transforming activities of streptolysin S preparations are independent of each other, and specifically that they are the attributes of two different streptococcal products, one of which is streptolysin S. The other is a nonhemolytic streptococcal product present in streptolysin S preparations but previously unrecognized. Some implications of these findings are discussed.