UNITED STATES

OMB APPROVAL

SECURITIES AND EXCHANGE COMMISSION

OMB Number:
3235-0145

Washington, D.C. 20549

Expires:
December 31, 2005

SCHEDULE 13G

Estimated average burden hours per response. . 11

o

Rule 13d-1(b)

x

Rule 13d-1(c)

o

Rule 13d-1(d)

CUSIP No. 170393102

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Discovery Group I, LLC

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

Not Applicable

(a)

o

(b)

o

3.

SEC Use Only

4.

Citizenship or Place of Organization
Delaware

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power
None

6.

Shared Voting Power
780,569

7.

Sole Dispositive Power
None

8.

Shared Dispositive Power
780,569

9.

Aggregate Amount Beneficially Owned by Each Reporting Person
780,569

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o
Not Applicable

11.

Percent of Class Represented by Amount in Row (9)
5.2%

12.

Type of Reporting Person (See Instructions)
OO

CUSIP No. 170393102

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Daniel J. Donoghue

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

Not Applicable

(a)

o

(b)

o

3.

SEC Use Only

4.

Citizenship or Place of Organization
U.S.A.

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power
None

6.

Shared Voting Power
780,569

7.

Sole Dispositive Power
None

8.

Shared Dispositive Power
780,569

9.

Aggregate Amount Beneficially Owned by Each Reporting Person
780,569

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o
Not Applicable

11.

Percent of Class Represented by Amount in Row (9)
5.2%

12.

Type of Reporting Person (See Instructions)
IN

CUSIP No. 170393102

1.

Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only)
Michael R. Murphy

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

Not Applicable

(a)

o

(b)

o

3.

SEC Use Only

4.

Citizenship or Place of Organization
U.S.A.

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

5.

Sole Voting Power
None

6.

Shared Voting Power
780,569

7.

Sole Dispositive Power
None

8.

Shared Dispositive Power
780,569

9.

Aggregate Amount Beneficially Owned by Each Reporting Person
780,569

10.

Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See Instructions)  o
Not Applicable

11.

Percent of Class Represented by Amount in Row (9)
5.2%

12.

Type of Reporting Person (See Instructions)
IN

Item 1.

(a)

Name of Issuer

Cholestech Corporation

(b)

Address of Issuer’s Principal Executive Offices

3347 Investment Boulevard, Hayward, California 94545

Item 2.

(a)

Name of Person Filing

Discovery Group I, LLC (“Discovery Group”)

Daniel J. Donoghue, a Managing Member of Discovery Group

Michael R. Murphy, a Managing Member of Discovery Group

(b)

Address of Principal Business Office or, if none, Residence

Discovery Group, Mr. Donoghue, and Mr. Murphy are all located at:

Hyatt Center, 24th Floor, 71 South Wacker Drive, Chicago, Illinois  60606

(c)

Citizenship

Discovery Group is a Delaware limited liability company

Mr. Donoghue and Mr. Murphy are U.S. citizens

(d)

Title of Class of Securities

Common Stock, no par value

(e)

CUSIP Number

170393102

Item 3.

If this statement is filed pursuant to §§240.13d-1(b) or 240.13d-2(b) or (c), check whether the person filing is a:

Not Applicable.

(a)

o

Broker or dealer registered under section 15 of the Act (15 U.S.C. 78o).

(b)

o

Bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c).

(c)

o

Insurance company as defined in section 3(a)(19) of the Act (15 U.S.C. 78c).

(d)

o

Investment company registered under section 8 of the Investment Company Act of 1940 (15 U.S.C 80a-8).

(e)

o

An investment adviser in accordance with §240.13d-1(b)(1)(ii)(E);

(f)

o

An employee benefit plan or endowment fund in accordance with §240.13d-1(b)(1)(ii)(F);

(g)

o

A parent holding company or control person in accordance with § 240.13d-1(b)(1)(ii)(G);

(h)

o

A savings associations as defined in Section 3(b) of the Federal Deposit Insurance Act (12 U.S.C. 1813);

(i)

o

A church plan that is excluded from the definition of an investment company under section 3(c)(14) of the Investment Company Act of 1940 (15 U.S.C. 80a-3);

(j)

o

Group, in accordance with §240.13d-1(b)(1)(ii)(J).

Item 4.

Ownership

Provide the following information regarding the aggregate number and percentage of the class of securities of the issuer identified in Item 1.

(a)

Amount beneficially owned:

Discovery Group — 780,569

Mr. Donoghue — 780,569

Mr. Murphy — 780,569

(b)

Percent of class:

Discovery Group — 5.2%

Mr. Donoghue — 5.2%

Mr. Murphy — 5.2%

The foregoing percentages are based on 14,892,870 shares of Common Stock of the Issuer identified in Item 1 outstanding as of May 31, 2006, as reported in the Issuer’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006.

(c)

Number of shares as to which the person has:

(i)

Sole power to vote or to direct the vote

None

(ii)

Shared power to vote or to direct the vote

Discovery Group — 780,569

Mr. Donoghue — 780,569

Mr. Murphy — 780,569

(iii)

Sole power to dispose or to direct the disposition of

None

(iv)

Shared power to dispose or to direct the disposition of

Discovery Group — 780,569

Mr. Donoghue — 780,569

Mr. Murphy — 780,569

Item 5.

Ownership of Five Percent or Less of a Class

If this statement is being filed to report the fact that as of the date hereof the reporting person has ceased to be the beneficial owner of more than five percent of the class of securities, check the followingڤ.

Not Applicable

Item 6.

Ownership of More than Five Percent on Behalf of Another Person

The shares reported herein have been acquired on behalf of discretionary clients of Discovery Group.  Such discretionary clients are entitled to receive all dividends from, and proceeds from the sale of, those shares.  None of those discretionary clients, to the knowledge of Discovery Group, Mr. Donoghue, or Mr. Murphy, has an economic interest in more than 5% of the class.

Item 7.

Identification and Classification of the Subsidiary Which Acquired the Security Being Reported on By the Parent Holding Company or Control Person

Not Applicable

Item 8.

Identification and Classification of Members of the Group

Not Applicable

Item 9.

Notice of Dissolution of Group

Not Applicable

Item 10.

Certification

By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect.

July 28, 2006

Date

DISCOVERY GROUP I, LLC

/s/ Michael R. Murphy

Signature

Michael R. Murphy, Managing Member

Name/Title

/s/ Daniel J. Donoghue

Signature

Daniel J. Donoghue

Name/Title

/s/ Michael R. Murphy

Signature

Michael R. Murphy

Name/Title

Exhibit 1

Joint Filing Agreement dated as of July 28, 2006, by and between Discovery Group I, LLC; Daniel J. Donoghue; and Michael R. Murphy.