Cholesterol forms crystals when the mol fraction of sterol in a membrane bilayer exceeds a certain value. The solubility limit of cholesterol is very dependent on the nature of the phospholipid with which it is mixed. NMR methods have proven useful in quantifying the amount of cholesterol monohydrate crystals present in mixtures with phospholipids. A protein, NAP-22, present in high abundance in the synaptic cell membrane and synaptic vesicle, promotes the formation of cholesterol crystallites in lipid mixtures in which cholesterol would be completely dissolved in the membrane in the absence of protein. This finding, along with effects of the protein on the phase transitions of mixtures of phosphatidylcholine (PC) and cholesterol indicate that NAP-22 facilitates the formation of cholesterol-rich domains. This protein will bind only to membranes of PC that contain either cholesterol or phosphatidylethanolamine (PE). The process requires the presence of a myristoyl group on the N-terminus of NAP-22. The phenomenon also does not occur with a 19 amino acid myristoylated peptide corresponding to the amino terminal segment of NAP-22. The basis of the selectivity of NAP-22 for interacting with membranes of specific composition is suggested to be due to the accessibility of the myristoyl group.