Alpha-hemolysin (aHL) is a transmembrane ion-conducting channel which finds application in single molecule sensing using nanopore technology. Biomolecules are allowed to pass through the pore of the protein and, as a result, there is a change in the ion current, which is monitored to quantify single-molecule sensing. However, it has been established that the change in current is also affected by the lipid membrane in which the protein is present. It is also known that cholesterol has a concentration-dependent reduction in the current through the pore, experimentally. The understanding of current reduction at a single-molecule level and theoretical models replicating these conditions are lacking. In the current thesis, molecular dynamics simulations are performed on aHL inserted into a 1-palmitoyl-2-oleoyl-sn-glycero-3-phospho-choline (POPC) lipid bilayer with varying concentrations of cholesterol to investigate the effect on ionic current. Effect of lipid interactions, especially of cholesterol, on the protein structure and hence functioning of the ion channel is investigated