P-glycoprotein (Pgp) is a transmembrane protein that actively exports lipophilic chemotherapeutics from the cells causing multidrug resistance. Pgp molecules are partially localized in TX-100-resistant rafts, and the activity of the transporter is highly sensitive to the presence of cholesterol. To better understand these relationships, the influence of membrane cholesterol content on Pgp function, as measured via calcein accumulation, was studied in correlation with changes elicited in membrane structure. Membrane cholesterol was modulated by heptakis(2,6-di-O-methyl)-beta-cyclodextrin (DIMEB) and the cholesterol inclusion complex of DIMEB (Chol-DIMEB). Changes in membrane cholesterol level were reflected by alterations in the overall lipid packing as measured by Merocyanine 540 (MC540) staining and were also accompanied by changes in the raft association of the pump. DIMEB and Chol-DIMEB treatments have also lead to increased permeability of the cell membrane in both directions, raising the possibility that the effects on pumping efficiency reflect leakage of ATP also from the non-permeabilized cells. However, the treatments did not influence the intracellular ATP levels of the non-permeabilized cells. Our data suggest that Pgp inhibition by cyclodextrin treatments arises through modulation of its membrane microenvironment, rather than as a result of concomitant cytotoxicity.