The existence of lipid rafts in biological membranes in vivo is still debated. In contrast, the formation of domains in model systems has been well documented. In giant unilamellar vesicles (GUVs) prepared from ternary mixtures of dioleoyl-phosphatidylcholine͞ sphingomyelin͞cholesterol, a clear separation of liquid-disordered and sphingomyelin-enriched, liquid-ordered phases could be observed. This phase separation can lead to the fission of the liquid-ordered phase from the vesicle. Here we show that in cholesterol-containing GUVs, the phase separation can involve dynamic redistribution of lipids from one phase into another as a result of a cross-linking perturbation. We found that the molecular structure of a sterol used for the preparation of GUVs determines (i) its ability to induce phase separation and (ii) the curvature (positive or negative) of the formed liquid-ordered phase. As a consequence, the latter can pinch off to the outside or inside of the vesicle. Remarkably, some mixtures of sterols induce liquidordered domains exhibiting both positive and negative curvature, which can lead to a new type of budding behavior in GUVs. Our findings could have implications for the role of sterols in various cell-biological processes such as budding of secretory vesicles, endocytosis, or formation of multivesicular bodies.giant unilamellar vesicles ͉ lipid rafts ͉ fluorescence correlation spectroscopy A ccording to the raft hypothesis, cellular membranes are not a homogenous mixture of lipids but contain dynamic entities enriched in sphingolipids and cholesterol (rafts) floating in the sea of glycerophospholipids (1, 2). It is assumed that the presence of long and saturated acyl chains in sphingolipids should allow cholesterol to become tightly intercalated with such lipids, resulting in the organization of liquid-ordered (l o ) phases (3-5). In contrast, unsaturated phospholipids are loosely packed and form a disordered state [usually indicated as liquid crystalline or liquid-disordered (l d )]. The difference in packing ability leads to phase separation (6). The hypothesis postulates that distinct proteins can selectively partition into lipid rafts, indicating that rafts could serve as specific sites for molecular sorting and polarized transport. A vast number of papers have been dedicated to the investigation of the involvement of rafts in different vital cellular processes. These processes include intracellular and intercellular signaling, protein sorting, formation of caveolae, and endocytic pathways.Detection and investigation of rafts in vivo appeared to be so complicated that some recent papers challenged their existence (7,8). Rafts have been operationally defined as detergentresistant membranes (DRMs), obtained by the treatment of membranes with mild detergents (9, 10). The correlation between DRMs and rafts in vivo requires further clarification. In contrast to in vivo studies, model membranes provide an excellent opportunity to investigate short-and long-range organization within the membrane plane. Fo...