Endotoxin-neutralizing protein (ENP) of the horseshoe crab is one of the most potent neutralizers of endotoxins [bacterial lipopolysaccharide (LPS)]. Here, we report on the interaction of LPS with recombinant ENP using a variety of physical and biological techniques. In biological assays (Limulus amebocyte lysate and tumour necrosis factor-alpha induction in human mononuclear cells), ENP causes a strong reduction of the immunostimulatory ability of LPS in a dose-dependent manner. Concomitantly, the accessible negative surface charges of LPS and lipid A (zeta potential) are neutralized and even converted into positive values. The gel to liquid crystalline phase transitions of LPS and lipid A shift to higher temperatures indicative of a rigidification of the acyl chains, however, the only slight enhancement of the transition enthalpy indicates that the hydrophobic moiety is not strongly disturbed. The aggregate structure of lipid A is converted from a cubic into a multilamellar phase upon ENP binding, whereas the secondary structure of ENP does not change due to the interaction with LPS. ENP contains a hydrophobic binding site to which the dye 1-anilino-8-sulfonic acid binds at a K(d) of 19 micro m, which is displaced by LPS. Because lipopolysaccharide-binding protein (LBP) is not able to bind to LPS when ENP and LPS are preincubated, tight binding of ENP to LPS can be deduced with a K(d) in the low nonomolar range. Importantly, ENP is able to incorporate by itself into target phospholipid liposomes, and is also able to mediate the intercalation of LPS into the liposomes thus acting as a transport protein in a manner similar to LBP. Thus, LPS-ENP complexes might enter target membranes of immunocompetent cells, but are not able to activate due to the ability of ENP to change LPS aggregates from an active into an inactive form.