A study is presented of the role of cholesterol content on the gel-to-liquid crystalline phase transition of freeze-dried liposomes stabilized with trehalose, a well known lyoprotectant. The phospholipids considered in this work, DPPC and DPPE, belong to the two predominant phospholipid species found in numerous biological membranes. Cholesterol is found in abundance in mammalian plasma membranes. DSC measurements reveal that cholesterol-containing liposomes exhibit multiple phase transitions upon dehydration. Addition of trehalose to these systems lowers the phase transition temperature and limits the phase separation of the lipidic components upon freeze-drying. This work provides strong evidence for the effectiveness of trehalose in stabilizing cholesterol-containing membranes upon lyophilization.