The synthetic, cell penetrating hexapeptide PAF26 (RKKWFW) is antifungal at low micromolar concentrations and has been proposed as a model for cationic, cell-penetrating antifungal peptides. Its short amino acid sequence facilitates the analysis of its structure-activity relationships using the fungal models Neurospora crassa and Saccharomyces cerevisiae, and human and plant pathogens Aspergillus fumigatus and Penicillium digitatum, respectively. Previously, PAF26 at low fungicidal concentrations was shown to be endocytically internalized, accumulated in vacuoles and then actively transported into the cytoplasm where it exerts its antifungal activity. In the present study, two PAF26 derivatives, PAF95 (AAAWFW) and PAF96 (RKKAAA), were designed to characterize the roles of the N-terminal cationic and the C-terminal hydrophobic motifs in PAF26's mode-of-action. PAF95 and PAF96 exhibited substantially reduced antifungal activity against all the fungi analyzed. PAF96 localized to fungal cell envelopes and was not internalized by the fungi. In contrast, PAF95 was taken up into vacuoles of N. crassa, wherein it accumulated and was trapped without toxic effects. Also, the PAF26 resistant Δarg1 strain of S. cerevisiae exhibited increased PAF26 accumulation in vacuoles. Live-cell imaging of GFP-labelled nuclei in A. fumigatus showed that transport of PAF26 from the vacuole to the cytoplasm was followed by nuclear breakdown and dissolution. This work demonstrates that the amphipathic PAF26 possesses two distinct motifs that allow three stages in its antifungal action to be defined: (i) its interaction with the cell envelope; (ii) its internalization and transport to vacuoles mediated by the aromatic hydrophobic domain; and (iii) its transport from vacuoles to the cytoplasm. Significantly, cationic residues in PAF26 are important not only for the electrostatic attraction and interaction with the fungal cell but also for transport from the vacuole to the cytoplasm, which coincides with cell death. Peptide containment within vacuoles preserves fungal cells from peptide toxicity.