The behavior of dehydroergosterol in L-alpha-dimyristoylphosphatidylcholine (DMPC) unsonicated multilamellar liposomes was characterized by absorption spectroscopy and fluorescence measurements. Dehydroergosterol exhibited a lowered absorption coefficient in multilamellar liposomes while the steady-state fluorescence anisotropy of dehydroergosterol in these membranes decreased significantly with increasing dehydroergosterol concentration, suggesting membrane sterol-sterol interactions. The comparative steady-state anisotropy of 0.9 mole percent dehydroergosterol in multilamellar liposomes was lower than in small unilamellar vesicles suggesting different sterol environments for dehydroergosterol. Dehydroergosterol fluorescence lifetime was relatively independent of membrane sterol content and yielded similar values in sonicated and unsonicated model membranes. In multilamellar liposomes containing 5 mole percent cholesterol, the gel-to-liquid crystalline phase transition of DMPC detected by 0.9 mole percent dehydroergosterol was significantly broadened when compared to the phase transition detected by dehydroergosterol in the absence of membrane cholesterol (Smutzer, G. et al. (1986) Biochim. Biophys. Acta 862, 361-371). In multilamellar liposomes containing 10 mole percent cholesterol, the major fluorescence lifetime of dehydroergosterol did not detect the gel-to-liquid crystalline phase transition of DMPC. Time-correlated fluorescence anisotropy decays of dehydroergosterol in DMPC multilamellar liposomes in the absence and presence of 5 mole percent cholesterol exhibited a single rotational correlation time near one nanosecond that was relatively independent of temperature and low concentrations of membrane cholesterol. The limiting anisotropy of 0.9 mole percent dehydroergosterol decreased above the gel-to-liquid crystalline phase transition in membranes without cholesterol and was not significantly affected by the phase transition in membranes containing 5 mole percent cholesterol. These results suggested hindered rotational diffusion of dehydroergosterol in multilamellar liposomes. Lifetime and time-correlated fluorescence measurements of 0.9 mole percent dehydroergosterol in multilamellar liposomes further suggested this fluorophore was detecting physical properties of the bulk membrane phospholipids in membranes devoid of cholesterol and was detecting sterol-rich regions in membranes of low sterol concentration.