Background In lipid bilayers, cholesterol facilitates the formation of the liquid-ordered phase and enables the formation of laterally ordered structures such as lipid rafts. While these domains have an important role in a variety of cellular processes, the precise atomic-level mechanisms responsible for cholesterol's specific ordering and packing capability have remained unresolved. Methodology/Principal Findings Our atomic-scale molecular dynamics simulations reveal that this ordering and the associated packing effects in membranes largely result from cholesterol's molecular structure, which differentiates cholesterol from other sterols. We find that cholesterol molecules prefer to be located in the second coordination shell, avoiding dir...