Cholesterol is a prominent component of mammalian plasma membranes and is one of the factors that determine membrane function. In this review the effects of cholesterol content on transport processes in biological membranes are summarized. Membrane cholesterol affects a variety of membrane proteins, including ion channels, transporters, and receptors. Present concepts concerning the mechanistic basis of lipid-induced modulation of transport protein function range between two extremes: modulation by bulk properties or by specific interactions. Interest in bulk properties has been focussed mainly on membrane fluidity. The fluidity of biomembranes is diminished particularly by enrichment with cholesterol. As a change in membrane composition alters the environment in which the proteins are dissolved, any process which depends on membrane protein function may be affected by alterations in membrane composition, such as a change in cholesterol content. This review emphasizes the inhibitory effect of cholesterol enrichment on all membrane ATPases studied, and the stimulating effect of cholesterol enrichment on most other membrane transport proteins. Together with the intriguing feature that the cholesterol content of plasma membranes is considerably higher than that of subcellular membranes, there is ample evidence for a significant role of plasma membrane cholesterol in transmembrane protein function.