This work examines three related, but previously unexplored, aspects of membrane biophysics and colloid science in the context of atherosclerosis. First, we show that sphingomyelinase (SMase)-induced aggregation of low density lipoproteins (LDLs), coupled with LDL exposure to cholesterol esterase (CEase), results in nucleation of cholesterol crystals, long considered the hallmark of atherosclerosis. In particular, this study reveals that the order of enzyme addition does not effect the propensity of LDL to nucleate cholesterol crystals, raising the possibility that nucleation can proceed from either the intra- or extracellular space. Second, we demonstrate that ceramide-rich aggregates of LDL release cholesterol to neighboring vesicles far more rapidly, and to a greater extent, than does native LDL. A likely explanation for this observation is displacement of cholesterol from SM-Chol rafts by "raft-loving" ceramide. Third, we demonstrate that a time-independent Förster resonance energy transfer (FRET) assay, based on dehydroergosterol and dansylated lecithin and used previously to study cholesterol nanodomains, can be used to measure raft sizes (on the order of 10 nm) in model membrane systems. Taken together, these observations point to the possibility of an extracellular nucleation mechanism and underscore the important role that biological colloids play in human disease.