Effects of cholesterol on permeability of K+ ion and on change in membrane potential induced by lysolecithin were studied. Cholesterol inhibited K+ release from rabbit red blood cells treated with lysolecithin (1.25 micrograms/ml), 3.3 X 10(-6) M of cholesterol being the optimum concentration for blocking K+ release. Changes in membrane potential, monitored by changes in intensity of fluorescence of cyanine dye, were induced by lysolecithin and inhibited by cholesterol. The inhibitory action on both K+ permeability and membrane potential varied with the cholesterol concentration. The observed effects are thought to be due to membrane-stabilizing activities such as decreasing membrane fluidity and hardening the membrane at the fluid-phase transition temperature. These properties of cholesterol may have significance in relation to transformed cells (tumor cells, lymphomed cells).