Multilamellar vesicles (MLV) were prepared from phospholipids with and without cholesterol in equimolar amounts and [4-14C]estradiol. Unincorporated estrogen was removed by petroleum ether extraction or by aqueous buffer washes. In either case, cholesterol-containing vesicles incorporated one-half the estradiol as vesicles without sterol. Addition of estradiol to preformed vesicles followed by buffer washes showed that vesicles without cholesterol invariably retained more estradiol than those with the sterol. Reduction of the cholesterol content to one-half increased estradiol incorporation. The pattern of estradiol removal from MLV with successive buffer washes indicated that much of the steroid associated with cholesterol-containing vesicles was superficially bound to the membrane but vesicles without cholesterol incorporated the estrogen into the bilayer structure. To test the role of cholesterol in limiting the uptake of an estrogen by cells, right-side out resealed ghosts of ox erythrocytes were prepared. They were partially depleted of cholesterol by exposure to small unilamellar vesicles of dioleoylphosphatidyl choline. A decrease in cholesterol content correlates with an increase in estradiol uptake by red cell ghosts. The experiments described point to a central role of cholesterol in limiting the uptake of steroids. The loss of cholesterol of steroid producing cells caused by tropic hormones may be key to their mode of action in promoting secretion of steroid hormones. Likewise, the long-term genomic responses of steroid target cells may depend upon their cholesterol content and the ease by which the steroid can penetrate the membrane barrier.