The mechanism of action of antimicrobial peptides is, to our knowledge, still poorly understood. To probe the biophysical characteristics that confer activity, we present here a molecular-dynamics and biophysical study of a cyclic antimicrobial peptide and its inactive linear analog. In the simulations, the cyclic peptide caused large perturbations in the bilayer and cooperatively opened a disordered toroidal pore, 1–2 nm in diameter. Electrophysiology measurements confirm discrete poration events of comparable size. We also show that lysine residues aligning parallel to each other in the cyclic but not linear peptide are crucial for function. By employing dual-color fluorescence burst analysis, we show that both peptides are able to fuse/aggregate liposomes but only the cyclic peptide is able to porate them. The results provide detailed insight on the molecular basis of activity of cyclic antimicrobial peptides