Cholesterol monomer is incorporated into alkyl sulfate micelles with a unitary free energy of -10.3 kcal/mol. This experimental free energy is in good agreement with that predicted by our previous determination of the hydrophobicity of the sterol suggesting that the partitioning is primarily hydrophobic with little or no contribution to the free energy from head group interactions in this system. The intrinsic hydrophobicity of cholesterol is shown to be insufficient for effective partitioning of the sterol between micelles (or bilayers) and its own self-associated form. This finding strongly supports a model of phospholipid-cholesterol interaction involving significant free energy contributions from head group effects such as alterations in hydrogen bonds or hydration. Since these head group contributions are not observed in the cholesterol-alkyl sulfate system, one concludes that there is a high degree of specificity of interaction between the sterol OH and polar moieties of other amphiphilic molecules.