Suspensions of dimyristoyl and dipalmitoyl phosphatidylcholine vesicles bearing 10 to 40 (w/w)% cholesterol inhibited the fertilizing ability of uterine-capacitated rabbit spermatozoa at concentrations of 1 to 10 mg of lipid/ml. Recovery of fertilizing ability by treated sperm cells was observed following insemination into the uterus 5 to 6 hr before ovulation. Vesicles lacking the sterol were not inhibitory under the conditions employed. Suspensions of cholesterol (0.4 to 4 mg of sterol/ml) with out phospholipid, in contrast, inhibited fertilization. Implication of cholesterol in sperm decapacitation by seminal plasma membrane vesicles is discussed in terms of these results.