Cholesterol is an essential structural component of cellular membranes in eukaryotes. Cholesterol in the exofacial leaflet of the plasma membrane is thought to form membrane nanodomains with sphingolipids and specific proteins. Additionally, cholesterol is found in the intracellular membranes of endosomes and has crucial functions in membrane trafficking. Furthermore, cellular cholesterol homeostasis and regulation of de novo synthesis rely on transport via both vesicular and non-vesicular pathways. Thus, the ability to visualize and detect intracellular cholesterol, especially in the plasma membrane, is critical to understanding the complex biology associated with cholesterol and the nanodomains. Perfringolysin O (PFO) theta toxin is one of the toxins secreted by the anaerobic bacteria Clostridium perfringens and this toxin forms pores in the plasma membrane that causes cell lysis. It is well understood that PFO recognizes and binds to cholesterol in the exofacial leaflets of the plasma membrane, and domain 4 of PFO (D4) is sufficient for the binding of cholesterol. Recent studies have taken advantage of this high-affinity cholesterol-binding domain to create a variety of cholesterol biosensors by using a non-toxic PFO or the D4 in isolation. This review highlights the characteristics and usefulness of, and the principal findings related to, these PFO-derived cholesterol biosensors.