Breast cancer resistance protein (BCRP/ABCG2) is an active efflux pump that belongs to the ATP-binding cassette (ABC) transporter family. It is located in various tissues involved in drug absorption, distribution, and elimination and plays an important role in multidrug resistance. For P-glycoprotein, another member of the ABC transporter family, it is well established that it is at least partly located in cholesterol and sphingolipid-enriched domains of the plasma membrane called "lipid rafts" and that the composition of the membrane lipids may modulate its efflux activity. This study addressed the compartmentalization of BCRP in the plasma membrane and the influence of membrane cholesterol on the efflux activity of BCRP. As a cell model, we used the canine kidney epithelial cell line MDCKII-BCRP transfected with the cDNA encoding human BCRP and the corresponding parental cell line MDCKII. Cholesterol depletion with methyl-beta-cyclodextrin (MbetaCD) provoked a 40% decrease in BCRP activity (p < 0.01) assessed with flow cytometry (pheophorbide A efflux assay). Cholesterol repletion with MbetaCD/cholesterol-inclusion complexes restored BCRP function, and cholesterol saturation of native cells did not further enhance BCRP activity. Coimmunoprecipitation experiments indicated a physical interaction between BCRP and caveolin-1, and Western blot analysis after density gradient ultracentrifugation demonstrated that BCRP is located in detergent-resistant membranes that also contain caveolin-1. In conclusion, our results demonstrate for the first time that BCRP is located in membrane rafts and that cholesterol has impact on its efflux activity.