The plasma membrane of eukaryotic cells contains a lipid bilayer which acts as a physical barrier and is the site for many cellular signaling events. The lipid molecules in the plasma membrane are non-randomly distributed within the bilayer. Both their lateral organization (lipid domains) and transverse distribution (lipid asymmetry) are important in membrane function. Since the function and structure of the plasma membrane are difficult to study due to its complex and dynamic nature, a good model membrane is needed. However, commonly used procedures for liposome preparation cannot truly mimic plasma membranes because they do not provide control over lipid asymmetry, i.e. differences between lipid composition in the inner and outer leaflets. To prepare biological-like asymmetric vesicles with a sphingolipid-rich outer leaflet and an unsaturated phospholipid-rich inner leaflet, a methyl-beta-cyclodextrin (MbCD)-induced lipid exchange technique was devised. Moreover, cholesterol can be introduced into the vesicles without destroying lipid asymmetry (by a second exchange step). Lipid asymmetry was confirmed by several assays. Lipid domain formation behavior in asymmetrical small unilamellar vesicles (SUVs) were characterized and compared to those in symmetric SUVs. Model membrane studies using symmetric model membranes have demonstrated that sphingolipids and cholesterol can form ordered domains that co-exist with liquid disordered domains formed by unsaturated phospholipids. Results from asymmetric SUVs showed that the sphingomyelin-rich outer leaflet formed ordered domains that were not affected by the presence of inner leaflet unsaturated phospholipids. This indicates that asymmetric lipid distribution can be conducive to ordered domain formation and thus support the possible existence of raft in eukaryotic plasma membranes. It was also found that the ordered domains in the outer leaflet can induce a certain amount of ordered domain formation in the inner leaflet, implying the existence of leaflets coupling behavior. Furthermore, it was discovered that asymmetric SUVs containing about 25mol% cholesterol formed ordered domains more thermally stable than those in asymmetric vesicles lacking cholesterol, showing that the crucial ability of cholesterol to stabilize ordered domain formation is likely to contribute to ordered domain formation in cell membranes. To mimic plasma membrane more closely, it is necessary to avoid use of SUVs which have very high curvature. To do this, the MbCD-induced lipid exchange method was extended to prepare asymmetric large unilamellar vesicles (LUVs). Domain-forming properties in asymmetric LUVs are analogous to those in asymmetric SUVs, exhibiting that ordered domain formation and leaflet-coupling behavior observed in asymmetric SUVs did not result from membrane curvature. The ability to prepare asymmetric vesicles represents an important improvement in model membrane preparation, and should aid in many future studies of lipid asymmetry in membrane structure and functions.