The mixing behavior of an exchangeable phospholipid (A) with an exchangeable sterol (B) in host. bilayers made from 1,2-dipalmitoyl-sn-glycero-3-phosphocholine (DPPC) containing varying concentrations of cholesterol has been examined via the nearest-neighbor recognition method. At low sterol concentrations (i.e., 2.5 mol %) the mixing between A and B is close to ideal. Incremental increases in the sterol concentration to 40 mol % led to net increases in the affinity between A and B. Similar mixing experiments that were carried out in the presence of chloroform showed a leveling effect, where moderate sterol-phospholipid affinity was observed in all cases. These results, together with the fact that the number of chloroform molecules that are absorbed per phospholipid is essentially constant and independent of the sterol content, support a model in which chloroform favors solvation of the phospholipids and a common membrane state is produced. Fluorescence measurements and Raman spectra have also shown that chloroform significantly loosens both cholesterol-poor and cholesterol-rich membranes made from DPPC. In a broader context, these results suggest a fundamentally new mechanim of anesthesia, where the anesthetic, by solvating the lipid components, profoundly changes the lateral organization of the lipid framework.