Previous studies have shown that nonenzymatic glycosylation of high-density lipoprotein (HDL) inhibits high-affinity binding to cultured cells and the candidate HDL-receptor protein. Because binding of HDL to its receptor is required for HDL-receptor–mediated cholesterol efflux from cells, we hypothesized that glycosylated HDL3 would have reduced ability to remove cholesterol from cells. HDL3 was glycosylated in vitro to achieve up to 40–50% reductions in free-lysine residues. Glycosylated HDL3 had a slightly greater ability than control HDL3 to sequester cholesterol directly from the plasma membrane, as predicted by changes in lipid composition. This process is independent of HDL-receptor binding and should not be influenced by reduced binding of HDL3. In contrast, efflux of intracellular cholesterol from cells, which is HDL-receptor dependent, was reduced 25–40%. The ability of glycosylated HDL3 to diminish cholesterol esterification was significantly reduced, indicating reduced net cholesterol efflux. Steady-state efflux of LDL-derived cholesterol was also markedly reduced. These findings suggest that nonenzymatically glycosylated HDL is functionally abnormal and might contribute to the accelerated development of atherosclerosis in patients with diabetes mellitus.