Cholesterol constitutes ∼30-40% of the mammalian plasma membrane, a larger fraction than of any other single component. It is a major player in numerous signaling processes as well as in shaping molecular membrane architecture. However, our knowledge of the dynamics of cholesterol in the plasma membrane is limited, restricting our understanding of the mechanisms regulating its involvement in cell signaling. Here, we applied advanced fluorescence imaging and spectroscopy approaches on in vitro (model membranes) and in vivo (live cells and embryos) membranes as well as in silico analysis to systematically study the nanoscale dynamics of cholesterol in biological membranes. Our results indicate that cholesterol diffuses faster than phospholipids in live membranes, but not in model membranes. Interestingly, a detailed statistical diffusion analysis suggested two-component diffusion for cholesterol in the plasma membrane of live cells. One of these components was similar to a freely diffusing phospholipid analogue, whereas the other one was significantly faster. When a cholesterol analogue was localized to the outer leaflet only, the fast diffusion of cholesterol disappeared, and it diffused similarly to phospholipids. Overall, our results suggest that cholesterol diffusion in the cell membrane is heterogeneous and that this diffusional heterogeneity is due to cholesterol's nanoscale interactions and localization in the membrane.