Amyloid formation by islet amyloid polypeptide (IAPP) contributes to β-cell dysfunction in type-2 diabetes. Perturbation of the β-cell membrane may contribute to IAPP induced toxicity. We examine the effects of lipid composition, salt and buffer on IAPP amyloid formation and on the ability of IAPP to induce leakage of model membranes. Even low levels of anionic lipids promote amyloid formation and membrane permeabilization. Increasing the percentage of the anionic lipids, POPS or DOPG, enhances the rate of amyloid formation and increases membrane permeabilization. The choice of zwitterionic lipid has no noticeable effect on membrane catalyzed amyloid formation, but in most cases affects leakage, which tends to decrease in the order DOPC>POPC>sphingomyelin. Uncharged lipids that increase membrane order reduce the ability of IAPP to induce leakage. Leakage is due predominately to pore formation rather than complete disruption of the vesicles under the conditions of these studies. Cholesterol at or below physiological levels significantly reduces the rate of vesicle catalyzed IAPP amyloid formation and decreases susceptibility to IAPP induced leakage. The effects of cholesterol on amyloid formation are masked by 25 mole percent POPS. Overall, there is a strong inverse correlation between the time to form amyloid and the extent of vesicle leakage. NaCl reduces the rate of membrane catalyzed amyloid formation by anionic vesicles, but accelerates amyloid formation in solution. The implications for IAPP membrane interactions are discussed, as is the possibility that loss of phosphatidylserine asymmetry enhances IAPP amyloid formation and membrane damage in vivo via a positive feedback loop.