To elucidate the cholesterol oxidase-membrane bilayer interaction, a cysteine was introduced into the active site lid at position-81 using the Brevibacterium enzyme. To eliminate the possibility of labeling native cysteine, the single cysteine in the wild-type enzyme was mutated to a serine without any change in activity. The loop-cysteine mutant was then labeled with acrylodan, an environment-sensitive fluorescence probe. The fluorescence increased and blue-shifted upon binding to lipid vesicles, consistent with a change into a more hydrophobic, i.e., lipid, environment. This acrylodan-labeled cholesterol oxidase was used to explore the pH, ionic strength, and headgroup dependence of binding. Between pH 6 and 10, there was no significant change in binding affinity. Incorporation of anionic lipids (phosphatidylserine) into the vesicles did not increase the binding affinity nor did altering the ionic strength. These experiments suggested that the interactions are primarily driven by hydrophobic effects not ionic effects. Using vesicles doped with either 5-doxyl phosphatidylcholine, 10-doxyl phosphatidylcholine, or phosphatidyl-tempocholine, quenching of acrylodan fluorescence was observed upon binding. Using the parallax method of London [Chattopadhyay, A., and London, E. (1987) Biochemistry 26, 39-45], the acrylodan ring is calculated to be 8.1 +/- 2.5 A from the center of the lipid bilayer. Modeling the acrylodan-cysteine residue as an extended chain suggests that the backbone of the loop does not penetrate into the lipid bilayer but interacts with the headgroups, i.e., the choline. These results demonstrate that cholesterol oxidase interacts directly with the lipid bilayer and sits on the surface of the membrane.