We previously showed that preincubation of a 10,000 g supernatant (S(10)) from rat liver for 20 min at 37 degrees C dramatically increased the subsequent incorporation of [(14)C]acetate into sterols. No activation was seen with [(14)C]mevalonate as substrate. In the present studies we have examined the effect of preincubation on HMG CoA reductase. When microsomes were isolated from S(10) by calcium precipitation, preincubation of S(10) increased the specific activity of HMG CoA reductase threefold. No activation of HMG CoA reductase was observed in microsomes isolated by ultracentrifugation. Activation was cyclic AMP-sensitive. When cyclic AMP (0.001-1.0 mM) and MgATP (1 mM) were present during the preincubation period, there was little or no activation of HMG CoA reductase activity or of sterol synthesis from acetate. MgATP alone did not prevent activation. Neither cyclic AMP nor MgATP was inhibitory when present only during the assay of sterol synthesis. We propose that the in vitro activation represents the reversal of a physiologic cyclic AMP-mediated mechanism for the control of hepatic HMG CoA reductase. That a phosphoprotein phosphatase may catalyze the activation was supported by the observation that sodium fluoride, an inhibitor of phosphoprotein phosphatases, inhibited the activation. These results suggest that hormone-induced changes in the cellular level of cyclic AMP may regulate the activity of HMG CoA reductase and the rate of hepatic cholesterol synthesis.