We have investigated the effects of cholesterol on the thermotropic phase behavior of annealed and unannealed aqueous dispersions of dipalmitoylphosphatidylcholine (DPPC) using high-sensitivity differential scanning calorimetry (DSC), concentrating particularly on the cholesterol concentration range from 0 to 20 mol%. We find that the incorporation of cholesterol into low-temperature annealed DPPC bilayers decreases the enthalpy of the subtransition without affecting the transition temperature, such that the subtransition is abolished by 20 mol% cholesterol. Similarly, the incorporation of cholesterol progressively decreases the temperature and enthalpy of the pretransition and abolishes it entirely at cholesterol concentrations above 5 mol%. The incorporation of increasing quantities of cholesterol also alters the main or chain-melting phase transition. At cholesterol concentrations of 2 to 20 mol% cholesterol, the DSC endotherm arising from the main transition consists of superimposed sharp and broad components, the former due to the melting of cholesterol-poor and the latter to the melting of the cholesterol-rich DPPC domains. The temperature and cooperativity of the sharp component decreases slightly with increasing cholesterol concentration whereas the enthalpy decreases markedly, becoming zero at 20-25 mol% cholesterol. In contrast, the temperature and enthalpy of the broad component increases, and the cooperativity decreases markedly over this same range of cholesterol concentrations. An apparent increase in cooperativity of the overall DPPC endotherm at 7 mol% cholesterol is shown to arise because of a convergence in the transition temperatures of the sharp and broad components of the DSC endotherms. Some of our experimental findings, particularly the absence of any evidence for the existence of a triple point near 7.5 mol% cholesterol, do not accord with a recently proposed DPPC/cholesterol phase diagram derived from DSC and 2H-NMR data (see Vist, M.R. and Davis, J.H. (1990) Biochemistry 29, 451-464). In addition, we examined the effect of cholesterol on phosphatidylcholines (PCs) of different chain lengths and confirm that a eutectic point does not exist for any of these PC/cholesterol mixtures. We then propose a new, more complete DPPC/cholesterol phase diagram based on our high-sensitivity DSC data as well as some recent spectroscopic data on PC/cholesterol mixtures and explore some of its biological implications.