The oligomerization of G protein-coupled receptors (GPCRs) represents an important process in GPCR function and drug discovery. We have addressed cholesterol-dependent oligomerization state of the serotonin1A receptor, a representative GPCR and an important drug target, utilizing photobleaching image correlation spectroscopy (pbICS). pbICS allows determination of oligomeric state of membrane receptors since change in cluster density upon photobleaching is dependent on the oligomeric state. Our results show that oligomeric state of the serotonin1A receptor is modulated by cell membrane cholesterol and a trimeric population of the receptor prevails in control (normal) cholesterol conditions. Interestingly, upon lowering membrane cholesterol, the predominant oligomeric population of the receptor changes to dimers. This is associated with an increase in specific ligand binding activity of the receptor, thereby implying a crucial role of receptor dimers in ligand binding activity. Upon cholesterol replenishment, the distribution of receptor oligomers is further changed such that the trimers become the major population, with a concomitant restoration of ligand binding activity to the control level. These results demonstrate the utility of pbICS in monitoring oligomeric states of membrane receptors in general, and the cholesterol-dependent oligomeric state of the serotonin1A receptor in particular. We envision that functional correlates of oligomeric states of GPCRs could provide better understanding of GPCR function in health and disease, and help design better therapeutic strategies.