Membrane cholesterol is required to maintain chemokine receptor conformation and function for CXCR4 and CCR5. We previously demonstrated that chemokines preferentially bind to receptors within lipid rafts, which are cholesterol- and sphingolipid-rich membrane microdomains. To further elucidate the role of cholesterol in chemokine receptor function, we examined the effects of membrane cholesterol oxidation by cholesterol oxidase (CO), which enzymatically converts cholesterol to 4-cholesten-3-one. Here, we demonstrate that CO treatment (0.25–2.0 U/ml) of human T cells inhibits CXCL12 (SDF-1α) and CCL4 (MIP-1β) binding to cell surface CXCR4 and CCR5, respectively, resulting in the inhibition of chemokine-mediated intracellular calcium mobilization and chemotaxis. The effects were significantly enhanced by cotreatment with low-dose sphingomyelinase (SMase) (0.125 mU/ml), which produced little inhibitory effect by itself. CO and SMase treatment also inhibited HIV-1 infection through CXCR4, but not virus replication. Similar to the removal of membrane cholesterol, CO/SMase treatment induced conformation changes in the chemokine receptors as detected by differential loss in binding of epitope-specific monoclonal antibodies. We conclude that the native form of cholesterol with the hydroxyl group at C3 is critical to CXCR4 and CCR5 conformation and function.