Sterols are essential membrane components of eukaryotic cells and are important for membrane organization and function. Cholesterol is the most representative sterol present in higher eukaryotes. It is often found distributed non-randomly in domains or pools in biological and model membranes. Cholesterol-rich functional microdomains (lipid rafts) are often implicated in cell signaling and membrane traffic. Interestingly, lipid rafts have also recently been isolated from organisms such as yeast and Drosophila, which have ergosterol as their major sterol component. Although detailed biophysical characterization of the effect of cholesterol on membranes is well documented, the effect of ergosterol on the organization and dynamics of membranes is not very clear. We have monitored the effect of cholesterol and ergosterol on the dynamic properties of both fluid (POPC) and gel (DPPC) phase membranes utilizing the environment-sensitive fluorescent membrane probe DPH. Our results from steady state and time-resolved fluorescence measurements show, for the first time, differential effects of ergosterol and cholesterol toward membrane organization. These novel results are relevant in the context of lipid rafts in ergosterol-containing organisms such as Drosophila which maintain a low level of sterol compared to higher eukaryotes. (C) 2004 Elsevier Inc. All rights reserved.