Thermotropic and structural effects of ethanol on phosphatidylserine (PS) membranes containing up to 0.4 mol fraction cholesterol were investigated by differential scanning calorimetry, X-ray diffraction and fluorescence spectroscopy. It was found that in the presence of cholesterol, 10% (v/v) added ethanol depresses the melting temperature of the phospholipid by approximately 2 degrees C, similar to what was observed in the absence of cholesterol. Below the melting temperature the progressive disordering effect of added cholesterol is weakly enhanced by the presence of ethanol. In the liquid crystalline state, the marked decrease in the thickness of the bilayer which ethanol causes in the absence of cholesterol (Chem. Phys. Lipids 92 (1998) 127), is also observed in its presence. We conclude that, in contrast to what has been observed for zwitterionic phospholipids, high concentrations of cholesterol do not diminish the interaction of ethanol with PS membranes. With addition of 10% (v/v) ethanol, crystalline cholesterol diffraction, an indication of phase separation of the sterol, appears at mol fraction cholesterol 0.34, as compared to 0.3 in the absence of ethanol (Chem. Phys. Lipids 92 (1998) 71).