Melatonin is a pineal hormone that has been shown to have protective effects in several diseases that are associated with cholesterol dysregulation, including cardiovascular disease, Alzheimer's disease, and certain types of cancers. Cholesterol is a major membrane constituent with both a structural and functional influence. It is also known that melatonin readily partitions into cellular membranes. We investigated the effects of melatonin and cholesterol on the structure and physical properties of a 1,2-dipalmitoyl-sn-glycero-3-phosphocholine (DPPC) monolayer as a simple membrane model using the Langmuir-Blodgett (L-B) monolayer technique and molecular dynamics (MD) simulations. We report that melatonin increases the area per lipid and elastic compressibility of the DPPC monolayer in a concentration dependent manner, while cholesterol has the opposite effect. When both melatonin and cholesterol were present in the monolayer, the compression isotherms showed normalization of the area per molecule towards that of the pure DPPC monolayer, thus indicating that melatonin counteracts and alleviates cholesterol's effects. Atomistic MD simulations of melatonin enriched DPPC systems correlate with our experimental findings and illustrate the structural effects of both cholesterol and melatonin. Our results suggest that melatonin is able to lessen the influence of cholesterol through two different mechanisms. Firstly, we have shown that melatonin has a fluidizing effect on monolayers comprising only lipid molecules. Secondly, we also observe that melatonin interacts directly with cholesterol. Our findings suggest a direct nonspecific interaction of melatonin may be a mechanism involved in reducing cholesterol associated membrane effects, thus suggesting the existence of a new mechanism of melatonin's action. This may have important biological relevance in addition to the well-known anti-oxidative and receptor binding effects.