Rationale Signal initiation by the HDL receptor scavenger receptor class B, type I (SR-BI), which is important to actions of HDL on endothelium and other processes, requires cholesterol efflux and the C-terminal transmembrane domain (CTTM). The CTTM uniquely interacts with plasma membrane (PM) cholesterol. Objective The molecular basis and functional significance of SR-BI interaction with plasma membrane cholesterol are unknown. We tested the hypotheses that the interaction is required for SR-BI signaling, and that it enables SR-BI to serve as a plasma membrane cholesterol sensor. Methods and Results In studies performed in COS-M6 cells, mutation of a highly-conserved CTTM glutamine to alanine (SR-BI-Q445A) decreased PM cholesterol interaction with the receptor by 71% without altering HDL binding or cholesterol uptake or efflux, and it yielded a receptor incapable of HDL-induced signaling. Signaling prompted by cholesterol efflux to methyl-β-cyclodextrin (CD) was also prevented, indicating that PM cholesterol interaction with the receptor enables it to serve as a PM cholesterol sensor. Using SR-BI-Q445A, we further demonstrated that PM cholesterol sensing by SR-BI does not influence SR-BI-mediated reverse cholesterol transport to the liver in mice. However, the PM cholesterol sensing does underlie apolipoprotein B intracellular trafficking in response to postprandial micelles or CD in cultured enterocytes, and it is required for HDL activation of eNOS and migration in cultured endothelial cells and HDL-induced angiogenesis in vivo. Conclusion Through interaction with plasma membrane cholesterol, SR-BI serves a PM cholesterol sensor, and the resulting intracellular signaling governs processes in both enterocytes and endothelial cells.