The interaction of three cyclodextrins (CDs), viz. beta-CD, heptakis (2,6-di-O-methyl)-beta-CD (DM-beta-CD). and 2-hydroxypropyl-beta-CD (HP-P-CD), with cholesterol was investigated using molecular dynamics (MD) simulations. The free energy along the reaction pathway delineating the inclusion of cholesterol into each CD was computed using the adaptive biasing force method. The association constant and the corresponding association free energy were derived by integrating the potential of mean force (PMF) over a representative ordering parameter. The results show that the free energy profiles possess two local minima corresponding to roughly equally probable binding modes. Among the three CDs, DM-beta-CD exhibits the highest propensity to associate with cholesterol. Ranking for binding cholesterol, viz. DM-beta-CD > HP-beta-CD > P-CD, agrees nicely with experiment. Partitioning of the PMF into free energy components illuminates that entering of cholesterol into the CD cavity is driven mainly by electrostatic interactions, whereas deeper inclusion results from van der Waals forces and solvation effects. Additional MD simulations were performed to investigate the structural stability of the host-guest complexes near the free energy minima. The present results demonstrate that association of cholesterol and CDs follows two possible binding modes. Although the latter are thermodynamically favorable for all CDs, one of the two inclusion complexes appears to be preferred kinetically in the case of DM-beta-CD.