Raft formation and enlargement was investigated in liposomes and supported bilayers prepared from sphingomyelin (SM), cholesterol, and unsaturated phospholipids; NBD-DPPE and rhodamine-(DOPE) were employed as fluorescent probes. Rafts were created by lowering temperature. Maintaining 20 mol % SM, fluorescence microscopy showed that, in the absence of photooxidation, large rafts did not form in giant unilamellar vesicles (GUVs) containing 20 or more mol % cholesterol. But if photooxidation was allowed to proceed, large rafts were readily observed. In population, cuvette experiments, small rafts formed without photooxidation at high cholesterol concentrations. Thus, photooxidation was the cause of raft enlargement during microscopy experiments. Because photooxidation results in peroxidation at lipid double bonds, photosensitization experiments were performed to explicitly produce peroxides of SM and an unsaturated phospholipid. GUVs of high cholesterol content containing the breakdown products of SM-peroxide, but not phospholipid-peroxide, resulted in large rafts after lowering temperature. In addition, GUV production by electroswelling can result in peroxides that cause large raft formation. The use of titanium electrodes eliminates this problem. In conclusion, lipid peroxides and their breakdown products are the cause of large raft formation in GUVs containing biological levels of cholesterol. It is critical that experiments investigating rafts in bilayer membranes avoid the production of peroxides.