To investigate the microscopic interactions between cholesterol and lipids in biological membranes, we have performed a series of molecular dynamics simulations of large membranes with different levels of cholesterol content. The simulations extend to 10 ns, and were performed with hydrated dipalmitoylphosphatidylcholine (DPPC) bilayers. The bilayers contain 1024 lipids of which 0-40% were cholesterol and the rest DPPC. The effects of cholesterol on the structure and mesoscopic dynamics of the bilayer were monitored as a function of cholesterol concentration. The main effects observed are a significant ordering of the DPPC chains (as monitored by NMR type order parameters), a reduced fraction of gauche bonds, a reduced surface area per lipid, less undulations--corresponding to an increased bending modulus for the membrane, smaller area fluctuations, and a reduced lateral diffusion of DPPC-lipids as well as cholesterols.