The molecular basis of the interaction of apolipophorin III (apoLp-III), an exchangeable apolipoprotein from hemolymph of the sphinx moth, Manduca sexta, with lipoprotein surfaces and phospholipids was studied by investigating the structural and binding properties of the C-terminal fragment of the native protein. A 4K peptide, corresponding to the terminal helical segment of the native protein, was generated by cyanogen bromide treatment, purified by gel filtration and reverse-phase HPLC, and characterized by N-terminal sequencing and amino acid and mass spectrometric analysis. Circular dichroism (CD) spectroscopy of the peptide in buffer indicated a predominantly unstructured state while addition of trifluoroethanol (TFE), a helix-inducing agent, resulted in an alpha-helical structure. Sedimentation equilibrium studies revealed that the 4K peptide was monomeric in buffer. The 4K peptide assumed an alpha-helical conformation in the presence of sodium dodecyl sulfate (SDS) and lysolecithin, but was unstructured in the presence of dimyristoylphosphatidylcholine, either when added to preformed vesicles or upon cosonication, indicating an ability to bind to detergent micelles but not to phospholipid bilayers. Unlike native apoLp-III, the 4K peptide did not confer protection against turbidity development to human low density lipoprotein upon incubation with phospholipase C, indicating an inability to interact with the surface of lipoproteins. Upon interaction with SDS micelles, both the 4K peptide and apoLp-III were resistant to urea-induced denaturation when compared to free apoLp-III, as evaluated by CD spectroscopy. The structural stability conferred upon interaction with detergents was similar for both the peptide and the native protein. Intrinsic fluorescence of the single tyrosine (Tyr) residue (Tyr 145 in the native protein), which is quenched in the free peptide, increased concurrently with the formation of alpha-helix in the presence of TFE or detergents. Tyr fluorescence emission was followed in both native apoLp-III and the 4K peptide as a probe to monitor conformational changes in different environments such as in H2O, (H2O)-H-2, TFE, and detergent micelles. Our studies suggest that other domains in the protein play a role in the amphipathic helix forming capacity of the terminal helical region of apoLp-III. Further, the fluorescence status of Tyr can be used as a reliable probe to monitor the conformational. changes that take place upon binding to apolar surfaces.