Stomatin is an ancient, widely expressed, oligomeric, monotopic membrane protein that is associated with cholesterol-rich membranes/lipid rafts. It is part of the SPFH superfamily including stomatin-like proteins, prohibitins, flotillin/reggie proteins, bacterial HflK/C proteins and erlins. Biochemical features such as palmitoylation, oligomerization, and hydrophobic "hairpin" structure show similarity to caveolins and other integral scaffolding proteins. Recent structure analyses of the conserved PHB/SPFH domain revealed amino acid residues and subdomains that appear essential for the structure and function of stomatin. To test the significance of these residues and domains, we exchanged or deleted them, expressed respective GFP-tagged mutants, and studied their subcellular localization, molecular dynamics and biochemical properties. We show that stomatin is a cholesterol binding protein and that at least two domains are important for the association with cholesterol-rich membranes. The conserved, prominent coiled-coil domain is necessary for oligomerization, while association with cholesterol-rich membranes is also involved in oligomer formation. FRAP analyses indicate that the C-terminus is the dominant entity for lateral mobility and binding site for the cortical actin cytoskeleton.