Synthetic fragments of the membrane channel-forming polypeptide, alamethicin, have been labeled with a fluorescent 5-dimethylaminonaphthalene-1-sulfonyl (dansyl) group at the ${NH}_2$-terminal. Seventeen and 13-residue fluorescent peptide esters have been shown to translocate divalent cations in unilamellar liposomes and uncouple oxidative phosphorylation in rat liver mitochondria. The corresponding peptide acids also exhibit membrane-modifying activity, whereas the shorter fragments are inactive. Aggregation of fluorescent peptides in aqueous solutions leads to a marked blue shift and enhancement of the dansyl group emission spectrum. "Critical micelle" concentrations may be determined for the association of peptides. The longer peptides aggregate at lower concentrations than the short peptides, with the ease of aggregation following a trend similar to that for functional activity. The peptide acids aggregate only in media of high ionic strength. The peptide ester aggregates are stabilized by increasing salt concentration and dissociated by urea, suggestive of hydrophobic stabilization of the aggregates. The enthalpy of association for the 10- and 17-residue peptide esters is estimated to be between -1 and -3 kcal ${mol}^{-1}$ of monomer. The aqueous phase aggregation of channel-forming peptides at low concentrations suggests that preformed aggregates may be inserted into the membrane to constitute functional channels.