To allow breathing and prevent alveolar collapse, lung surfactant (LS) develops a complex membranous system at the respiratory surface. LS is defined by a specific protein and lipid composition, including saturated and unsaturated phospholipid species and cholesterol. Surfactant protein C (SP-C) has been suggested to be an essential element for sustaining the presence of cholesterol in surfactant without functional impairment. In this work, we used a fluorescent sterol-partitioning assay to assess the effect of the surfactant proteins SP-B and SP-C on cholesterol distribution in membranes. Our results suggest that in the LS context, the combined action of SP-B and SP-C appears to facilitate cholesterol dynamics, whereas SP-C does not seem to establish a direct interaction with cholesterol that could increase the partition of free cholesterol into membranes. Interestingly, SP-C exhibits a membrane-fragmentation behavior, leading to the conversion of large unilamellar vesicles into highly curved vesicles ∼25 nm in diameter. Sterol partition was observed to be sensitive to the bending of bilayers, indicating that the effect of SP-C to mobilize cholesterol could be indirectly associated with SP-C-mediated membrane remodeling. Our results suggest a potential role for SP-C in generating small surfactant structures that may participate in cholesterol mobilization and pulmonary surfactant homeostasis at the alveolar interfaces.