Cholesterol-rich membrane domains function in various membrane events as diverse as signal transduction and membrane traffic. We studied the interaction of a fluorescein ester of polyethylene glycol-derivatized cholesterol (fPEG-Chol) with cholesterol-rich membranes both in cells and in model membranes. Unlike filipin and other cholesterol probes, this molecule could be applied as an aqueous dispersion to various samples. When added to live cells, fPEG-Chol distributed exclusively in the outer plasma membrane leaflet and was enriched in microdomains that dynamically clustered by the activation of receptor signaling. The surface-bound fPEG-Chol was slowly internalized via clathrin-independent pathway into endosomes together with lipid raft markers. Noteworthy, fPEG-Chol could be microinjected in the living cells in which we found Golgi apparatus as the sole major organelle to be labeled. PEG-Chol, thus, provides a novel, sensitive probe for unraveling the dynamics of cholesterol-rich microdomains in living cells.