A thermodynamic and a microscopic interaction model are proposed to describe the phase equilibria in the phosphatidylcholine-cholesterol system. The model calculations allow for a solid phase with conformationally ordered acyl chains and liquid phases with conformationally ordered as well as disordered chains. The resulting phase diagram is in excellent agreement with the experimental phase diagram for dipalmitoylphosphatidylcholine bilayers with cholesterol as determined by a recent NMR and calorimetry study. It is thus demonstrated that the phase behaviour of phosphatidylcholine-cholesterol mixtures can be rationalized using only a few basic assumptions: (i) Cholesterol interacts favourably with phosphatidylcholine chains in an extended conformation, (ii) the main transition of pure phosphatidylcholine bilayers takes place in terms of translational variables as well acyl-chain conformational variables, and (iii) cholesterol disturbs the translational order in the crystalline (gel) state of phosphatidylcholine. These results suggest that the occurrence of specific phosphatidylcholine-cholesterol complexes is not implied by the experimental thermodynamic data.