The influenza virus M2 amphipathic helix (M2AH) alters membrane curvature in a cholesterol-dependent manner, mediating viral membrane scission during influenza virus budding. Here, we have investigated the biophysical effects of cholesterol on the ability of an M2AH peptide to manipulate membrane properties. We see that the ability of the M2AH to interact with membranes and form an α-helix is independent of membrane cholesterol concentration; however, cholesterol affects the angle of the M2AH peptide within the membrane. This change in membrane orientation affects the ability of the M2AH to alter lipid order. In low-cholesterol membranes, the M2AH is inserted near the level of the lipid head groups, increasing lipid order, which may contribute to generation of the membrane curvature. As the cholesterol content increases, the M2AH insertion becomes flatter and slightly deeper in the membrane below the lipid headgroups, where the polar face can continue to interact with the headgroups while the hydrophobic face binds cholesterol. This changed orientation minimizes lipid packing defects and lipid order changes, likely reducing the generation of membrane curvature. Thus, cholesterol regulates M2 membrane scission by precisely modulating M2AH positioning within the membrane. This has implications for the understanding of many of amphipathic-helix-driven cellular budding processes that occur in specific lipid environments.