Cholesterol plays a key role in the molecular and mesoscopic organisation of lipid membranes and it is expected that changes in its molecular structure (e.g., through environmental factors such as oxidative stress) may affect adversely membrane properties and function. In this study, we present evidence that oxidation of cholesterol has significant effects on the mechanical properties, molecular and mesoscopic organisation and lipid–sterol interactions in condensed monolayers composed of the main species found in the inner leaflet of the erythrocyte membrane. Using a combination of experimental methods (static area compressibility, surface dilatational rheology, fluorescence microscopy, and surface sensitive X-ray techniques) and atomistic molecular dynamics simulations, we show that oxidation of cholesterol to 7-ketocholesterol leads to stiffening of the monolayer (under both static and dynamic conditions), significant changes in the monolayer microdomain organisation, disruption in the van der Waals, electrostatic and hydrophobic interactions between the sterol and the other lipid species, and the lipid membrane hydration. Surface sensitive X-ray techniques reveal that, whilst the molecular packing mode is not significantly affected by cholesterol oxidation in these condensed phases, there are subtle changes in membrane thickness and a significant decrease in the coherence length in monolayers containing 7-ketocholesterol.