Pneumolysin (PLY) is the main virulence factor of Streptococcus pneumoniae that causes pneumonia, meningitis, and invasive pneumococcal infection. PLY is produced as monomers, which bind to cholesterol-containing membranes, where they oligomerize into large pores. To investigate the pore-forming mechanism, we determined the crystal structure of PLY at 2.4 Å and used it to design mutants on the surface of monomers. Electron microscopy of liposomes incubated with PLY mutants revealed that several mutations interfered with ring formation. Mutants that formed incomplete rings or linear arrays had strongly reduced hemolytic activity. By high-resolution time-lapse atomic force microscopy of wild-type PLY, we observed two different ring-shaped complexes. Most of the complexes protruded ∼8 nm above the membrane surface, while a smaller number protruded ∼11 nm or more. The lower complexes were identified as pores or prepores by the presence or absence of a lipid bilayer in their center. The taller complexes were side-by-side assemblies of monomers of soluble PLY that represent an early form of the prepore. Our observations suggest a four-step mechanism of membrane attachment and pore formation by PLY, which is discussed in the context of recent structural models. The functional separation of these steps is necessary for the understanding how cholesterol-dependent cytolysins form pores and lyse cells.