This review summarizes the evidence that the physical properties of lipids which accumulate in the intima play major roles in the progression and regression of lesions of atherosclerosis. All of the three major classes of lipids that accumulate in lesions (phospholipids, cholesterol, and cholesterol esters) are water insoluble. Phospholipids and cholesterol esters are almost mutually insoluble, but cholesterol, a crystalline solid at 37 degrees C, has considerable solubility in phospholipid bilayers and cholesterol esters. In normal infant intima, cholesterol is solubilized by phospholipid membranes. During fatty streak development, groups of cells are stimulated to take up more cholesterol than they excrete. The excess cholesterol is biochemically converted to cholesterol ester, which separates as droplets to form foam cells. Some fatty streaks then undergo a transition to an intermediate lesion containing excess cholesterol which is carried in cholesterol-supersaturated membranes and droplets. When nucleation of this excess cholesterol occurs, it precipitates as crystals; their formation coincides with the onset of necrosis and plaque formation. The hallmark of plaque is the presence of inert cholesterol crystals. They appear to form from hydrolysis of the older deposits of cholesterol esters in the base of intermediate lesions. Thus, the lipids in plaques are stratified, with recently deposited cholesterol esters present in the luminal part of the intima and older deposits in the deeper regions. When plasma cholesterol is lowered below about 150 mg/dl, lipids are mobilized from lesions and regression gradually occurs. Early in the regression process, cholesterol esters are reduced at least partly by hydrolysis to yield cholesterol, some of which may crystallize and inhibit rapid regression. After prolonged periods of low plasma cholesterol, cholesterol esters and foam cells disappear and crystalline cholesterol gradually dissolves, leading to true regression.