We have monitored the ligand binding of the bovine hippocampal 5-HT1A receptor following treatment with the sterol-binding antifungal antibiotic nystatin. Nystatin considerably inhibits the specific binding of the antagonist to 5-HT1A receptors in a concentration-dependent manner. However, the specific agonist binding does not show significant changes. Fluorescence polarization measurements of membrane probes incorporated at different locations in the membrane revealed a substantial decrease in the membrane order in the interior of the bilayer. Experiments with cholesterol-depleted membranes indicate that the action of nystatin is mediated through membrane cholesterol. These results represent the first report on the effect of a cholesterol-perturbing agent on the ligand-binding activity of this important neurotransmitter receptor.