The basic concept of the fluid-mosaic model of Singer and Nicolson, an essential point of which is that the membrane proteins are floating in a sea of excess lipid molecules organized in the lipid bilayer, may be misleading in understanding the movement of membrane components in biological membranes that show distinct domain structure. It seems that the lipid bilayer is an active factor in forming the membrane structure, and the lipid composition is responsible for the presence of domains in the membrane. The main role in the process of domain formation is played by cholesterol and sphingolipids. The results presented here show that in a binary mixture of cholesterol and unsaturated phospholipids, cholesterol is segregated out from the bulk unsaturated liquid-crystalline phase. This forms cholesterol-enriched domains or clustered cholesterol domains due to the lateral nonconformability between the rigid planar ring structure of cholesterol and the rigid bend of the unsaturated alkyl chain at double bond position. These cholesterol-enriched domains may be stabilized by the presence of saturated alkyl chains of sphingomyelin or glycosphingolipids, and also by specific proteins which selectively locate in these domains and stabilize them as a result of protein-protein interaction. Such lipid domains are called "rafts" and have been shown to be responsible both for signal transduction to and from the cell and for protein sorting. We also looked at whether polar carotenoids, compounds showing some similarities to cholesterol and affecting membrane properties in a similar way, would also promote domain formation and locate preferentially in one of the lipid phases. Our preliminary data show that in the presence of cholesterol, lutein (a polar carotenoid) may segregate out from saturated lipid regions (liquid-ordered phase) and accumulate in the regions rich in unsaturated phospholipids forming carotenoid-rich domains there. Conventional and pulse EPR (electron paramagnetic resonance) spin labeling techniques were employed to assess the molecular organization and dynamics of the raft-constituent molecules and of the raft itself in the membrane.