Fluorescence energy transfer from dehydroergosterol (DHE) to dansylated lecithin (DL) was used to characterize lecithin-cholesterol vesicles in the presence of the bile salt, sodium taurocholate. At lipid concentrations approximating physiological levels, exposure of fluorescently labeled vesicles to the bile salt led to a dose-dependent increase in the DHE-to-DL fluorescence ratio during the first 24 h after mixing. The initial changes in the fluorescence ratio correlated well with conventional turbidity measurements that quantify partial micellization of vesicles as a function of bile salt loading. In addition, fluorescence energy transfer from DHE to DL revealed cholesterol enrichment of vesicles and re-vesiculation of micelles at bile salt loadings for which vesicles and micelles coexisted. Samples containing the cholesterol-enriched vesicle fraction exhibited further increases in the DHE-to-DL fluorescence ratio during a 4-week observation period but only after a significant lag period of several days. The lag period decreased with cholesterol loading, and the increase in the fluorescence ratio always preceded the appearance of microscopic, birefringent, either needlelike or platelike, cholesterol crystals, in samples that were initially supersaturated with cholesterol. Cholesterol crystals were not observed, and the fluorescence ratio did not increase, for any sample that was undersaturated with cholesterol.Taken together, these results suggest that the latter changes in fluorescence are the result of cholesterol nucleation. Fluorescence energy transfer from DHE to DL is therefore a promising technique for the characterization of model bile and, possibly, provides a direct measurement of cholesterol nucleation.