Protoplasts of a group A streptococcal strain were shown to contain enzymatic activity capable of converting lipoteichoic acid (LTA) to deacylated lipoteichoic acid (dLTA). The enzyme(s) appear to be located mainly in the membrane, although activity was also found in the cytoplasm. Determination of the sites of cleavage within the LTA molecule was approached by comparing the chemical composition of LTA and native dLTA. Native dLTA, as distinguished from chemically deacylated LTA, was isolated from buffer in which live streptococci had been resuspended and incubated. The chemical data suggest that the enzyme(s) was(were) lipolytic in nature; that is, the conversion of LTA to dLTA was the result of cleavage of the ester linkages between the fatty acids and the remainder of the LTA molecule.