The (Na + + Mg 2+)-ATPase purified from Acholeplasma laidwaii B membranes was reconstituted into large, unimellar vesicles formed from dimyristoylphosphatidylcholine (DMPC) and varying amounts of cholesterol or epicholesterol. The ATP hydrolytic activity of the reconstituted enzyme was then determined over a range of temperatures and the phase state of the DMPC in the ATPase-containing vesicles was characterized by high-sensitivity differential scanning calorimetry. In the vesicles containing only DMPC, the ATPase activity is higher in association with lipids in the liquid-crystalline state than with gel-state phospholipids, resulting in a curvilinear, biphasic Arrhenius plot with a pronounced change in slope at the elevated gel to liquid-crystalline phase transition temperature of the DMPC. The incorporation of increasing amounts of cholesterol into the DMPC vesicles results in a progressively greater degree of inhibition of ATPase activity at higher temperatures but a stimulation of activity at lower temperatures, thus producing Arrhenius plots with progressively less curvature and without an abrupt change in slope at physiological temperatures. As cholesterol concentration in the ATPase-DMPC vesicles increases, the calorimetric phase transition of the phospholipids is further broadened and eventually abolished. The incorporation of epicholesterol into the DMPC proteoliposomes results in similar but less pronounced effects on ATPase activity, and its effect on the phase behavior of the DMPC-ATPase vesicles is also similarly attenuated in comparison with cholesterol. Moreover, cholesterol added to the purified enzyme in the absence of phospholipid does not show any significant effect on either the activity or the temperature dependence of the detergent-solubilized ATPase. These findings are consistent with the suggestion that cholesterol exerts its effect on the ATPase activity by altering the physical state of the phospholipid, since the ordering effect of cholesterol (or epicholesterol) on liquid-crystalline lipid results in a reduction of ATPase activity while the disordering of gel-state lipid results in an increase in activity.