Changes in the level of membrane cholesterol regulate a variety of signaling processes including those mediated by acylated signaling molecules that localize to lipid rafts. Recently several types of ion channels have been shown to have cholesterol-dependent activity and to localize to lipid rafts. In this study, we have investigated the role of cholesterol in the regulation of ion transport in colonic epithelial cells. We observed that methyl-beta-cyclodextrin (MbetaCD), a cholesterol-sequestering molecule, activated transepithelial short circuit current (Isc), but only from the basolateral side. Similar results were obtained with a cholesterol-binding agent, filipin, and with the sphingomyelin-degrading enzyme, sphingomyelinase. Experiments with DeltaF508CFTR mutant mice indicated that raft disruption affected CFTR-mediated anion secretion, while pharmacological studies showed that this effect was due to activation of basolateral large conductance Ca2+-activated K+ (BK) channels. Sucrose density gradient centrifugation studies demonstrated that BK channels were normally present in the high-density fraction containing the detergent-insoluble cytoskeleton, and that following treatment with MbetaCD, BK channels redistributed into detergent-soluble fractions. Our evidence therefore implicates novel high-density cholesterol-enriched plasma membrane microdomains in the modulation of BK channel activation and anion secretion in colonic epithelia.