The interaction of an amphiphilic, 40-amino acid β-amyloid (Ab) peptide with liposomal membranes as a function of sterol mole fraction (X sterol) was studied based on the fluorescence anisotropy of a site-specific membrane sterol probe, dehydroergosterol (DHE), and fluorescence resonance energy transfer (FRET) from the native Tyr-10 residue of Aβ to DHE. Without Aβ, peaks or kinks in the DHE anisotropy versus X sterol plot were detected at Xsterol ≈ 0.25, 0.33, and 0.53. Monomeric Aβ preserved these peaks/kinks, but oligomeric Aβ suppressed them and created a new DHE anisotropy peak at Xsterol ≈ 0.38. The above critical Xsterol values coincide favorably with the superlattice compositions predicted by the cholesterol superlattice model, suggesting that membrane cholesterol tends to adopt a regular lateral arrangement, or domain formation, in the lipid bilayers. For FRET, a peak was also detected at Xsterol ≈ 0.38 for both monomeric and oligomeric Aβ, implying increased penetration of Aβ into the lipid bilayer at this sterol mole fraction. We conclude that the interaction of Aβ with membranes is affected by the lateral organization of cholesterol, and hypothesize that the formation of an oligomeric Aβ/cholesterol domain complex may be linked to the toxicity of Aβ in neuronal membranes.