Accumulation of beta amyloid (Aβ) in the brain is central to the pathogenesis of Alzheimer's disease. Aβ can bind to membrane lipids and this binding may have detrimental effects on cell function. In this study, surface plasmon resonance technology was used to study Aβ binding to membranes. Aβ peptides bound to synthetic lipid mixtures and to an intact plasma membrane preparation isolated from vascular smooth muscle cells. Aβ peptides were also toxic to vascular smooth muscle cells. There was a good correlation between the toxic effect of Aβ peptides and their membrane binding. ‘Ageing’ the Aβ peptides by incubation for 5 days increased the proportion of oligomeric species, and also increased toxicity and the amount of binding to lipids. The toxicities of various Aβ analogs correlated with their lipid binding. Significantly, binding was influenced by the concentration of cholesterol in the lipid mixture. Reduction of cholesterol in vascular smooth muscle cells not only reduced the binding of Aβ to purified plasma membrane preparations but also reduced Aβ toxicity. The results support the view that Aβ toxicity is a direct consequence of binding to lipids in the membrane. Reduction of membrane cholesterol using cholesterol-lowering drugs may be of therapeutic benefit because it reduces Aβ-membrane binding.