The locational and orientational structure and the dynamics of cholesterol in the bilayer membrane were studied by using the solution-state NMR. The intermolecular nuclear Overhauser effect (NOE) was analyzed for large unilamellar vesicles (100 nm in diameter) composed of dimyristoylphosphatidylcholine (DMPC) and cholesterol at cholesterol concentrations of 9-33 mol %. The DMPC headgroups show H-1-{H-1}-NOEs with the methyl groups at the hydrophobic terminals of both cholesterol and DMPC, illustrating the significant fluctuation of the bilayer membrane in the vertical (bilayer normal) direction. Cholesterol was found to keep the hydroxyl (OH) group toward the outer water pool on the basis of the following observations: (1) the cross correlation between the DMPC headgroup and the cholesterol terminal methyl group is weaker than those between the DMPC headgroups and (2) the methyl group at the hydrophobic terminal of cholesterol shows strong correlation with the terminal group of the DMPC chain portion. The OH group plays a crucial role in orienting cholesterol with its OH group outward, since cholestane, which has a molecular structure similar to that of cholesterol except for the absence of the OH group, was found to have no orientational preference in the bilayer membrane. The dynamic slowdown at high cholesterol concentrations is demonstrated on the basis of the correlation times for NOE as well as the broadening of the proton linewidths.