Cholesterol is a polycyclic ring compound that is predominately hydrocarbon and therefore hydrophobic. It is important in the metabolism of eucaryotic cells because it
is a component of cell membranes and involved in membrane fluidity
is a precursor to many steroid hormones
When cholesterol is incorporated into a plasma membrane it does so with a specific polarity. The hydroxyl group of the cholesterol is oriented in the membrane such that it interacts with the water in the inside of the cell or the water on the outside of the cell.