Entry of cholera toxin (CT) into target epithelial cells and the induction of toxicity depend on CT binding to the lipid-based receptor ganglioside G(M1) and association with detergent-insoluble membrane microdomains, a function of the toxin's B-subunit. The B-subunits of CT and related Escherichia coli toxins exhibit a highly conserved exposed peptide loop (Glu(51)-Ile(58)) that faces the cell membrane upon B-subunit binding to G(M1). Mutation of His(57) to Ala in this loop resulted in a toxin (CT-H57A) that bound G(M1) with high apparent affinity, but failed to induce toxicity. CT-H57A bound to only a fraction of the cell-surface receptors available to wild-type CT. The bulk of cell-surface receptors inaccessible to CT-H57A localized to detergent-insoluble apical membrane microdomains (lipid rafts). Compared with wild-type toxin, CT-H57A exhibited slightly lower apparent binding affinity for and less stable binding to G(M1) in vitro. Rather than being transported into the Golgi apparatus, a process required for toxicity, most of CT-H57A was rapidly released from intact cells at physiologic temperatures or degraded following its internalization. These data indicate that CT action depends on the stable formation of the CT B-subunit.G(M1) complex and provide evidence that G(M1) functions as a necessary sorting motif for the retrograde trafficking of toxin into the secretory pathway of target epithelial cells.