Membrane lipid composition is a major determinant of cell excitability. In this study, we assessed the role of membrane cholesterol composition in the distribution and function of Kv1.5-based channels in rat cardiac membranes. In isolated rat atrial myocytes, the application of methyl-b-cyclodextrin (MCD), an agent that depletes membrane cholesterol, caused a delayed increase in the Kv1.5-based sustained component, Isus, which reached steady-state in ~7 minutes. This effect was prevented by preloading the MCD with cholesterol. MCD-increased current was inhibited by low 4-AP concentration. Neonatal rat cardiomyocytes transfected with GFP-tagged Kv1.5 channels showed a large ultrarapid delayed-rectifier current (IKur), which was also stimulated by MCD. In atrial cryosections, Kv1.5 channels were mainly located at the intercalated disk, whereas caveolin-3 predominated at the cell periphery. A small portion of Kv1.5 floated in the low-density fractions of step sucrose-gradient preparations. In live neonatal cardiomyocytes, GFP-tagged Kv1.5 channels were predominantly organized in clusters at the basal plasma membrane. MCD caused reorganization of Kv1.5-subunits into larger clusters that redistributed throughout the plasma membrane. The MCD effect on clusters was sizable 7 minutes after its application. We conclude that Kv1.5-subunits are concentrated in cholesterol-enriched membrane microdomains distinct from caveolae, and that redistribution of Kv1.5-subunits by depletion of membrane cholesterol increases their current-carrying capacity.