The effects of cholesterol on the protein structure and on the ionic channel activity of purified acetylcholine receptor (AcChR) reconstituted into lipid vesicles have been studied, respectively, by Fourier-transform infrared spectroscopy and by rapid kinetics of cation influx. Reconstitution of the AcChR in asolectin phospholipid vesicles in the absence of either cholesterol or the nonpolar lipids present in crude asolectin extracts results in a considerable loss of the ability of the AcChR to support cation channel function. This functional loss is accompanied by spectral changes in the conformationally-sensitive amide I band of the protein infrared spectrum which are indicative of alteration in the protein secondary structure. Quantitative estimation of such alteration by band-fitting analysis reveals a marked decrease in ordered protein structures such as the alpha-helix and beta-pleated sheet, concomitant with an increase in less ordered structures appearing at 1644 cm-1 in the infrared spectrum. Furthermore, the addition of increasing amounts of cholesterol to the reconstituted bilayer produces a progressive, complete recovery both in the control of cation channel function and in the infrared spectrum. This restoration of AcChR structure and function by cholesterol, however, does not occur when the AcChR is reconstituted in vesicles made from purified egg phosphatidylcholine, thus suggesting that the presence in the reconstituted bilayer of phospholipids other than phosphatidylcholine may be required for cholesterol to exert its modulatory effects.(ABSTRACT TRUNCATED AT 250 WORDS)