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<i>Candida albicans</i> produces an important virulence factor, the hypha-associated <i>Ece1</i>-derived secreted peptide toxin candidalysin, which is crucial for the establishment of mucosal and systemic infections. <i>C. albicans</i> has also long been known to be hemolytic, yet the hemolytic factor has not been clearly identified. Here, we show that candidalysin is the hemolytic factor of <i>C. albicans</i>. Its hemolytic activity is modulated by fragments of another <i>Ece1</i> peptide, P7. Hemolysis by candidalysin can be neutralized by the purinergic receptor antagonist pyridoxal-phosphate-6-azophenyl-2′,4′-disulfonic acid (PPADS). PPADS also affects candidalysin’s ability to intercalate into synthetic membranes. We also describe the neutralization potential of two anti-candidalysin nanobodies, which are promising candidates for future anti-<i>Candida</i> therapy. This work provides evidence that the historically proposed hemolytic factor of <i>C. albicans</i> is in fact candidalysin and sheds more light on the complex roles of this toxin in <i>C. albicans</i> biology and pathogenicity.