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The purpose of this paper was to investigate the aggregation of amphotericin B (AMB) and AMB-arabinogalactan conjugate (AMB-AGC), and the interactions of these drugs with free and membrane-embedded sterols. Aggregation of AMB and AMB-AGC was studied by circular dichroic (CD) and UV absorbance spectroscopic techniques. The effect of liposomes on the spectra was utilized to investigate the interactions of aggregates with membrane-embedded sterols. Interaction with free sterols was studied by measuring sterols' effect on AMB/AMB-AGC susceptibility test. The results demonstrated that AMB-AGC forms unique aggregates in aqueous solution which differ from those formed by free AMB. Ergosterol and cholesterol embedded in liposomes, affected the CD spectra obtained for both AMB and AMB-AGC, indicating interactions of these sterols with both drugs. Interaction with both cholesterol and ergosterol resulted in an increase of AMB-AGC's minimal inhibitory concentration (MIC) in Candida albicans. In conclusion, AMB-AGC forms unique aggregates in aqueous solution; these aggregates interact with membrane-embedded cholesterol and ergosterol and with free sterols. These results indicate that the selectivity of AMB-AGC to fungal cells may not occur due to inability to bind cholesterol but probably as a result of this unique aggregation. Understanding this mechanism may help to develop a safer AMB formulation for therapy.