A water-soluble preparation of lipopolysaccharide was isolated from the extracellular lipopolysaccharide-phospholipid-protein complex formed by Escherichia coli A.T.C.C. 12408. 2. Heating at 100 degrees and pH4.6 caused a rapid decrease in serological activity concomitant with the release of 3-deoxy-2-oxo-octonate; aggregation of the molecules also occurred. 3. Further evidence that the release of 3-deoxy-2-oxo-octonate is related to loss of serological activity was obtained by comparing the effects of heating for 1hr. at 100 degrees and pH values between 5.0 and 9.0; detectable changes still occurred at pH7.5. 4. 3-Deoxy-2-oxo-octonate was isolated from the products of hydrolysis of lipopolysaccharide and shown to be an effective inhibitor of the precipitin reaction between lipopolysaccharide and homologous antiserum. 5. The possibility that 3-deoxy-2-oxo-octonate is joined to the lipopolysaccharide through a phosphodiester linkage is discussed.