Phospholipid (PL) scramblases are single-pass transmembrane protein mediating bidirectional PL translocation. Previously in silico analysis of human PL scramblases, predicted the presence of an uncharacterized cholesterol-binding domain spanning partly in the transmembrane helix as well as in the adjacent extracellular coil. This domain was found to be universally conserved in diverse organisms like Caenorhabditis elegans. In this study, we investigated the saturable cholesterol-binding domain of SCRM-1 using fluorescence sterol binding assay, Stern-Volmer quenching, Förster resonance energy transfer, and CD spectroscopy. We observed high-affinity interaction between cholesterol and SCRM-1. Our results support a previous report, which showed that the cholesterol ordering effect reduced the scramblase activity of hPLSCR1. Considering the presence of a high-affinity binding sequence, we propose that the reduction in activity could partly be due to the cholesterol binding. To validate this, we generated a C-terminal helix (CTH) deletion construct (∆CTH SCRM-1) and a point mutation in the putative cholesterol-binding domain I273D SCRM-1. Deletion construct greatly reduced cholesterol affinity along with loss of scramblase activity. In contrast to this, I273D SCRM-1 retained scrambling activity in proteoliposomes containing 30 mol% cholesterol but lost sterol binding ability. These results suggest that C-terminal helix is crucial for membrane insertion and in the lipid bilayer the scrambling activity of SCRM-1 is modulated through its interaction with cholesterol. © 2021 Elsevier B.V.