Detergent-insoluble membrane fragments that are rich in sphingolipid and cholesterol can be isolated from both cell lysates and model membranes. We have proposed that these arise from membranes that are in the liquid-ordered phase both in vivo and in vitro [Schroeder et al. (1994) Proc. Natl. Acad. Sci. U.S.A. 91, 12130-12134]. In order to detect formation of the liquid-ordered phase while avoiding possible detergent artifacts, we have now used fluorescence quenching to examine the phase behavior of mixtures of phosphatidylcholines, sphingolipids, and cholesterol. Phase separation was found in binary mixtures of either dipalmitoylphosphatidylcholine (DPPC) or sphingomyelin (SM) and a nitroxide-labeled phosphatidylcholine (12SLPC). A DPPC- or SM-enriched solidlike gel phase coexisted with a 12SLPC-enriched liquid-disordered fluid phase at 23 degrees C. As expected, phase separation was not seen at low concentrations of DPPC or SM. Instead, only a uniform fluid phase was present. Including 33 mol % cholesterol in model membranes greatly promoted phase separation. Phase separation was seen at higher temperatures and/or at lower concentrations of DPPC or SM in the presence of cholesterol than in its absence. Mixtures of DPPC or SM and cholesterol are known to form the liquid-ordered phase. Therefore, the fact that phase separation was observed in the cholesterol-containing membranes shows that liquid-ordered and liquid-disordered phase domains coexist. At 37 degrees C, the SM-enriched liquid-ordered phase was first seen at a SM/PC ratio of close to 0.25, when SM made up 17% of the total lipid including cholesterol. (This is similar to or less than the SM concentration of the plasma membranes of mammalian cells.) Furthermore, the detergent insolubility of cholesterol-containing model membranes correlated well with the amount of liquid-ordered phase as detected by fluorescence quenching. Thus, the detergent-insoluble membranes isolated from cells are likely to exist in the liquid-ordered phase prior to detergent extraction. The promotion of liquid-ordered phase formation may be an important function of cholesterol and sphingolipids in cells and may be a major distinction between the cholesterol- and sphingolipid-rich plasma membrane and most other cellular membranes.