In most eukaryotes, cytokinesis is mediated by the constriction of a contractile acto-myosin ring (CR), which promotes the ingression of the cleavage furrow. Many components of the CR interact with plasma membrane lipids suggesting that lipids may regulate CR assembly and function. Although there is clear evidence that phosphoinositides play an important role in cytokinesis, much less is known about the role of sterols in this process. Here, we studied how sterols influence division plane positioning and CR assembly in fission yeast. We show that increasing ergosterol levels in the plasma membrane blocks the assembly of F-actin cables from cytokinetic precursor nodes, preventing their compaction into a ring. Abnormal F-actin cables form after a delay, leading to randomly placed septa. Since the formin Cdc12 was detected on cytokinetic precursors and the phenotype can be partially rescued by inhibiting the Arp2/3 complex, which competes with formins for F-actin nucleation, we propose that ergosterol may inhibit formin dependent assembly of F-actin cables from cytokinetic precursors.