The peroxidation of membrane lipids by free radicals contributes to aging, numerous diseases, and ferroptosis, an iron-dependent form of cell death. Peroxidation changes the structure, conformation and physicochemical properties of lipids, leading to major membrane alterations including bilayer thinning, altered fluidity, and increased permeability. Whether and how lipid peroxidation impacts the lateral organization of proteins and lipids in biological membranes, however, remains poorly understood. Here, we employ cell-derived giant plasma membrane vesicles (GPMVs) as a model to investigate the impact of lipid peroxidation on ordered membrane domains, often termed membrane rafts. We show that lipid peroxidation induced by the Fenton reaction dramatically enhances phase separation propensity of GPMVs into co-existing liquid ordered (raft) and liquid disordered (non-raft) domains and increases the relative abundance of the disordered, non-raft phase. Peroxidation also leads to preferential accumulation of peroxidized lipids and 4-hydroxynonenal (4-HNE) adducts in the disordered phase, decreased lipid packing in both raft and non-raft domains, and translocation of multiple classes of proteins out of rafts. These findings indicate that peroxidation of plasma membrane lipids disturbs many aspects of membrane rafts, including their stability, abundance, packing, and protein and lipid composition. We propose that these disruptions contribute to the pathological consequences of lipid peroxidation during aging and disease, and thus serve as potential targets for therapeutic intervention.