The production, crystal structure, and functional characterization of the C-terminal cysteine-rich secretory protein/antigen 5/pathogenesis related-1 (CAP) domain of pathogen-related yeast protein-1 (Pry1) from Saccharomyces cerevisiae is presented. The CAP domain of Pry1 (Pry1CAP) is functional in vivo as its expression restores cholesterol export to yeast mutants lacking endogenous Pry1 and Pry2. Recombinant Pry1CAP forms dimers in solution, is sufficient for in vitro cholesterol binding, and has comparable binding properties as full-length Pry1. Two crystal structures of Pry1CAP are reported, one with Mg(2+) coordinated to the conserved CAP tetrad (His208, Glu215, Glu233 and His250) in spacegroup I41 and the other without divalent cations in spacegroup P6122. The latter structure contains four 1,4-dioxane molecules from the crystallization solution, one of which sits in the cholesterol binding site. Both structures reveal that the divalent cation and cholesterol binding sites are connected upon dimerization, providing a structural basis for the observed Mg(2+)-dependent sterol binding by Pry1.