Mammalian sphingolipids, primarily with C24 or C16 acyl chains, reside in the outer leaflet of the plasma membrane. Curiously, little is known how C24 sphingolipids impact cholesterol and membrane microdomains. Here, we present evidence that C24 sphingomyelin, when placed in the outer leaflet, suppresses microdomains in giant unilamellar vesicles and also suppresses submicron domains in the plasma membrane of HeLa cells. Free energy calculations suggested that cholesterol has a preference for the inner leaflet if C24 sphingomyelin is in the outer leaflet. We indeed observe that cholesterol enriches in the inner leaflet (80%) if C24 sphingomyelin is in the outer leaflet. Similarly, cholesterol primarily resides in the cytoplasmic leaflet (80%) in the plasma membrane of human erythrocytes where C24 sphingolipids are naturally abundant in the outer leaflet. We conclude that C24 sphingomyelin uniquely interacts with cholesterol and regulates the lateral organization in asymmetric membranes, potentially by generating cholesterol asymmetry.