Escherichia coli haemolysin A (HlyA), an RTX toxin, is secreted probably as an unfolded intermediate, by the type I (ABC transporter-dependent) pathway, utilizing a C-terminal secretion signal. However, the mechanism of translocation and post-translocation folding is not understood. We identified a mutation (hlyA99) at the extreme C terminus, which is dominant in competition experiments, blocking secretion of the wild-type toxin co-expressed in the same cell. This suggests that unlike recessive mutations which affect recognition of the translocation machinery, the hlyA99 mutation interferes with some later step in secretion. Indeed, the mutation reduced haemolytic activity of the toxin and the activity of beta-lactamase when the latter was fused to a C-terminal 23 kDa fragment of HlyA carrying the hlyA99 mutation. A second mutant (hlyAdel6), lacking the six C-terminal residues of HlyA, also showed reduced haemolytic activity and neither mutant protein regained normal haemolytic activity in in vitro unfolding/refolding experiments. Tryptophan fluorescence spectroscopy indicated differences in structure between the secreted forms of wild-type HlyA and the HlyA Del6 mutant. These results suggested that the mutations affected the correct folding of both HlyA and the beta-lactamase fusion. Thus, we propose a dual function for the HlyA C terminus involving an important role in post-translocation folding as well as targeting HlyA for secretion.