Saturated and unsaturated phospholipids (PLs) can segregate into lateral domains. The preference of cholesterol for saturated acyl chains over monounsaturated, and especially polyunsaturated ones, may also affect lateral segregation. Here we have studied how cholesterol influenced the lateral segregation of saturated and unsaturated PLs, for which cholesterol had a varying degree of affinity. The fluorescence lifetime of trans-parinaric acid reported the formation of ordered domains (gel or liquid-ordered (lo)) in bilayers composed of different unsaturated phosphatidylcholines, and dipalmitoyl-phosphatidylcholine or n-palmitoyl-sphingomyelin, in the presence or absence of cholesterol. We observed that cholesterol facilitated lateral segregations and the degree of facilitation correlated with the relative affinity of cholesterol for the different PLs in the bilayers. Differential scanning calorimetry and (2)H nuclear magnetic resonance showed that cholesterol increased the thermostability of both the gel and lo-domains. Increased number of double bonds in the unsaturated PL increased the order in the lo-domains, likely by enriching the ordered domains in saturated lipids and cholesterol. This supported the conclusions from the trans-parinaric acid experiments, and offers insight into how cholesterol facilitated lateral segregation. In conclusion, the relative affinity of cholesterol for different PLs appears to be an important determinant for the formation of ordered domains. Our data suggests that knowledge of the affinity of cholesterol for the different PLs in a bilayer allows prediction of the degree to which the sterol promotes lo-domain formation.