Cellular plasma membranes are laterally heterogeneous, featuring a variety of distinct subcompartments that differ in their biophysical properties and composition. A large number of studies have focused on understanding the basis for this heterogeneity and its physiological relevance. The membrane raft hypothesis formalized a physicochemical principle for a subtype of such lateral membrane heterogeneity, in which the preferential associations between cholesterol and saturated lipids drive the formation of relatively packed (or ordered) membrane domains that selectively recruit certain lipids and proteins. Recent studies have yielded new insights into this mechanism and its relevance in vivo, owing primarily to the development of improved biochemical and biophysical technologies.