The Ib-M1 peptide exhibits bactericidal activity against Escherichia coli O157:H7 and low toxicity in mammalian cells. The present study aimed to evaluate the effect of Ib-M1 on E. coli O157:H7 membrane permeabilization. For this purpose, the minimum inhibitory concentrations of Ib-M1 for E. coli O157:H7 and ML35 were measured. The permeability of the E. coli outer and inner membranes was determined by measuring N-phenyl-1-naphthylamine and O-nitrophenyl-β-galactosidase hydrolysis, respectively after bacterial exposure to antimicrobial peptides and control antibiotics. Morphological changes in antimicrobial-exposed E. coli O157:H7 were evaluated by scanning electron microscopy following treatment with antimicrobial peptides. Ib-M1 expressed activity against E. coli O157:H7 and ML35 at minimal inhibitory concentrations (MIC) of 2.9 ± 1.7 and 6.3 ± 0 μM, respectively. The peptide induced permeabilization of the outer membrane of E. coli O157:H7 at all concentrations evaluated and permeabilization of the inner membrane after 50 min at concentrations between 1× MIC and 8× MIC. The morphological changes induced by Ib-M1 led to significant alterations in bacterial shape including collapsed cells and pronounced surface roughness and invaginations. In conclusion, physiological and morphological evidence indicates that the Ib-M1 antimicrobial effect against E. coli O157:H7 is mediated by its permeabilizing action on the outer and inner bacterial membranes.