Biological membranes are complex structures composed largely of proteins and lipids. These components have very different structural and physical properties and consequently they do not form a single homogeneous mixture. Rather components of the mixture are more enriched in some regions than in others. This can be demonstrated with simple lipid mixtures that spontaneously segregate components so as to form different lipid phases that are immiscible with one another. The segregation of molecular components of biological membranes also involves proteins. One driving force that would promote the segregation of membrane components is the preferential interaction between a protein and certain lipid components. Among the varied lipid components of mammalian membranes, the structure and physical properties of cholesterol is quite different from that of other major membrane lipids. It would therefore be expected that in many cases proteins would have very different energies of interaction with cholesterol vs. those of other membrane lipids. This would be sufficient to cause segregation of components in membranes. The factors that facilitate the interaction of proteins with cholesterol are varied and are not yet completely understood. However, there are certain groups that are present in some proteins that facilitate interaction of the protein with cholesterol. These groups include saturated acyl chains of lipidated proteins, as well as certain amino acid sequences. Although there is some understanding as to why these particular groups favour interaction with cholesterol, our knowledge of these molecular features is not sufficiently developed to allow for the design of agents that will modify such binding.