Lipid A moiety has been identified as the bioactive component of bacterial endotoxins (lipopolysaccharides). However, the molecular mechanism of biological activity of lipid A is still not fully understood. This paper contributes to understanding of the molecular mechanism of action of bacterial endotoxins by comparing molecular modelling results for two possible mechanisms with the underlying experimental data. Mechanisms of action involving specific binding of lipid A to a protein receptor as well as nonspecific intercalation into phospholipid membrane of a host cell were modelled and analysed. As the cellular receptor for endotoxin has not been identified, a model of a peptidic pseudoreceptor was proposed, based on molecular structure, symmetry of the lipid A moiety and the observed character of endotoxin-binding sites in proteins. We have studied the monomeric form of lipid A from Escherichia coli and its seven synthetic analogues with varying numbers of phosphate groups and correlated them with known biological activities determined by the Limulus assay. Gibbs free energies associated with the interaction of lipid A with the pseudoreceptor model and intercalation into phospholipid membrane calculated by molecular mechanics and molecular dynamics methods were used to compare the two possible mechanisms of action. The results suggest that specific binding of lipid A analogues to the peptidic pseudoreceptor carrying an amphipathic cationic binding pattern BHPHB (B, basic; H, hydrophobic; P, polar residue, respectively) is energetically more favourable than intercalation into the phospholipid membrane. In addition, binding affinities of lipid A analogues to the best minimum binding sequence KFSFK of the pseudoreceptor correlated with the experimental Limulus activity parameter. This correlation enabled us to rationalize the observed relationship between the number and position of the phosphate groups in the lipid A moiety and its biological activity in terms of specific ligand–receptor interactions. If lipid A–receptor interaction involves formation of phosphate-ammonium ion-pair(s) with cationic amino-acid residues, the specific mechanism of action was fully consistent with the underlying experimental data. As a consequence, recognition of lipid A variants by an amphipathic binding sequence BHPHB of a host-cell protein receptor might represent the initial and/or rate-determining molecular event of the mechanism of action of lipid A (or endotoxin). The insight into the molecular mechanism of action and the structure of the lipid A-binding pattern have potential implications for rational drug design strategies of endotoxin-neutralizing agents or binding factors.