Two of the physiologically important processes that take place in biological membranes are the partitioning of water-soluble proteins into the membrane and the sequestering of specific transmembrane proteins into membrane microdomains or 'rafts'. Although these two processes often involve different classes of protein, recent biophysical studies indicate that they both strongly depend on the structural and elastic properties of the membrane bilayer. That is, both the partitioning of peptides into membranes and the distribution of transmembrane peptides in the plane of the membrane are modulated by physical properties of the lipid bilayer that are controlled by cholesterol content and the composition of the phospholipid hydrocarbon chain.