Lateral heterogeneities in the classical fluid-mosaic model of cell membranes are now envisaged as domains or 'rafts' that are enriched in (glyco)sphingolipids, cholesterol, specific membrane proteins and glycosylphosphatidylinositol (GPI)-anchored proteins. These rafts dictate the sorting of associated proteins and/or provide sites for assembling cytoplasmic signalling molecules. However, there is no direct evidence that rafts exist in living cells. We have now measured the extent of energy transfer between isoforms of the folate receptor bound to a fluorescent analogue of folic acid, in terms of the dependence of fluorescence polarization on fluorophore densities in membranes. We find that the extent of energy transfer for the GPI-anchored folate-receptor isoform is density-independent, which is characteristic of organization in sub-pixel-sized domains at the surface of living cells; however, the extent of energy transfer for the transmembrane-anchored folate-receptor isoform was density-dependent, which is consistent with a random distribution. These domains are likely to be less than 70 nm in diameter and are disrupted by removal of cellular cholesterol. These results indicate that lipid-linked proteins are organized in cholesterol-dependent submicron-sized domains. Our methodology offers a new way of monitoring nanometre-scale association between molecules in living cells.