In a previous study we showed that budding of HIV-1 particles occurs at highly specialized membrane microdomains known as lipid rafts. These microdomains are characterized by a distinct lipid composition that includes high concentrations of cholesterol, sphingolipids, and glycolipids. Since cholesterol is known to play a key role in the entry of some other viruses, our observation of HIV budding from lipid rafts led us to investigate the role in HIV-1 entry of cholesterol and lipid rafts in the plasma membrane of susceptible cells. We have used 2-OH-propyl-β-cyclodextrin (β-cyclodextrin) to deplete cellular cholesterol and disperse lipid rafts. Our results show that removal of cellular cholesterol rendered primary cells and cell lines highly resistant to HIV-1-mediated syncytium formation and to infection by both CXCR4-and CCR5-specific viruses. β-Cyclodextrin treatment of cells partially reduced HIV-1 binding, while rendering chemokine receptors highly sensitive to antibody-mediated internalization. There was no effect on CD4 expression. All of the above-described effects were readily reversed by incubating cholesterol-depleted cells with low concentrations of cholesterol-loaded β-cyclodextrin to restore cholesterol levels. Cholesterol depletion made cells resistant to SDF-1-induced binding to ICAM-1 through LFA-1. Since LFA-1 contributes significantly to cell binding by HIV-1, this latter effect may have contributed to the observed reduction in HIV-1 binding to cells after treatment with β-cyclodextrin. Our results indicate that cholesterol may be critical to the HIV-1 coreceptor function of chemokine receptors and is required for infection of cells by HIV-1.