Intracellular cargos are often membrane-enclosed and transported by microtubule-based motors in the presence of microtubule-associated proteins (MAPs). Whereas increasing evidence reveals how MAPs impact the interactions between motors and microtubules, critical questions remain about the impact of the cargo membrane on transport. Here we combined in vitro optical trapping with theoretical approaches to determine the effect of a lipid cargo membrane on kinesin-based transport in the presence of MAP tau. Our results demonstrate that attaching kinesin to a fluid lipid membrane reduces the inhibitory effect of tau on kinesin. Moreover, adding cholesterol, which reduces kinesin diffusion in the cargo membrane, amplifies the inhibitory effect of tau on kinesin binding in a dosage-dependent manner. We propose that reduction of kinesin diffusion in the cargo membrane underlies the effect of cholesterol on kinesin binding in the presence of tau, and we provide a simple model for this proposed mechanism. Our study establishes a direct link between cargo membrane cholesterol and MAP-based regulation of kinesin-1. The cholesterol effects uncovered here may more broadly extend to other lipid alterations that impact motor diffusion in the cargo membrane, including those associated with aging and neurological diseases.