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The lateral diffusion of a fluorescent-labeled phospholipid, phosphatidyl-N-(4-nitrobenzo-2-oxa-1,3,-diazole)ethanolamine, has been measured in binary mixtures of cholesterol and dimyristoyl phosphatidylcholine at temperatures both above and below 23.8 degrees C, the chain-melting transition temperature of this phosphatidylcholine. There is a temperature-composition region, approximately temperature less than 23 degrees C and mole fraction of cholesterol (X) less than 0.20, in which the lateral diffusion coefficient of the fluorescent probe is at least an order of magnitude smaller than it is at points outside of this temperature-composition region. At temperatures above approximately 23 degrees C there is a significant increasing cholesterol concentration, for X greater than 0.2.