The EPR spectra of spin-labeled lipid chains in fully hydrated bilayer membranes of dimyristoyl phosphatidylcholine containing 40 mol % of cholesterol have been studied in the liquid-ordered phase at a microwave radiation frequency of 94 GHz. At such high field strengths, the spectra should be optimally sensitive to lateral chain ordering that is expected in the formation of in-plane domains. The high-field EPR spectra from random dispersions of the cholesterol-containing membranes display very little axial averaging of the nitroxide g-tensor anisotropy for lipids spin labeled toward the carboxyl end of the sn-2 chain (down to the 8-C atom). For these positions of labeling, anisotropic 14N-hyperfine splittings are resolved in the gzz and gyy regions of the nonaxial EPR spectra. For positions of labeling further down the lipid chain, toward the terminal methyl group, the axial averaging of the spectral features systematically increases and is complete at the 14-C atom position. Concomitantly, the time-averaged <Azz> element of the 14N-hyperfine tensor decreases, indicating that the axial rotation at the terminal methyl end of the chains arises from correlated torsional motions about the bonds of the chain backbone, the dynamics of which also give rise to a differential line broadening of the 14N-hyperfine manifolds in the gzz region of the spectrum. These results provide an indication of the way in which lateral ordering of lipid chains in membranes is induced by cholesterol.