Islet amyloid polypeptide (IAPP) is responsible for amyloid formation in type 2 diabetes and contributes to the failure of islet cell transplants, however the mechanisms of IAPP-induced cytotoxicity are not known. Interactions with model anionic membranes are known to catalyze IAPP amyloid formation in vitro. Human IAPP damages anionic membranes, promoting vesicle leakage, but the features that control IAPP-membrane interactions and the connection with cellular toxicity are not clear. Kinetic studies with wildtype IAPP and IAPP mutants demonstrate that membrane leakage is induced by prefibrillar IAPP species and continues over the course of amyloid formation, correlating additional membrane disruption with fibril growth. Analyses of a set of designed mutants reveal that membrane leakage does not require the formation of β-sheet or α-helical structures. A His-18 to Arg substitution enhances leakage, whereas replacement of all of the aromatic residues via a triple leucine mutant has no effect. Biophysical measurements in conjunction with cytotoxicity studies show that nonamyloidogenic rat IAPP is as effective as human IAPP at disrupting standard anionic model membranes under conditions where rat IAPP does not induce cellular toxicity. Similar results are obtained with more complex model membranes, including ternary systems that contain cholesterol and are capable of forming lipid rafts. A designed point mutant, I26P-IAPP; a designed double mutant, G24P, I26P-IAPP; a double N-methylated variant; and pramlintide, a US Food and Drug Administration-approved IAPP variant all induce membrane leakage, but are not cytotoxic, showing that there is no one-to-one relationship between disruption of model membranes and induction of cellular toxicity.