The characteristics of neutral cholesteryl ester hydrolase activities found in the microsomal and cytosolic subcellular fractions of rat lactating mammary tissue were investigated. The enzymes were assayed using cholesteryl oleate dispersed as a mixed micelle with phosphatidylcholine and sodium taurocholate (molar ratio 1:4:2) as substrate. This method gave activities approx. 20-fold higher than those seen when cholesteryl oleate was added in ethanol. Addition of phosphatidylcholine and sodium taurocholate to the assays using the ethanol-dissolved substrate did not increase the activities observed. When the cholesteryl oleate was dispersed with phosphatidylcholine only (molar ratio, 1:4) the activity of the two neutral cholesteryl ester hydrolases was also decreased considerably compared to that found with mixed micelles. In this case, however, approx. 60% of the cytosolic, but only 10% of the microsomal activity, was restored by separate addition of sodium taurocholate. The activities of both the microsomal and the cytosolic neutral cholesteryl ester hydrolases were inhibited by MgCl2, and this inhibition was almost completely reversed by the addition of an equimolar concentration of ATP. At a fixed concentration of MgCl2 increasing concentrations of ATP increased the enzyme activities in a dose-dependent way. The activity of the microsomal, but not the cytosolic enzyme was enhanced by a cyclic AMP-dependent protein kinase and both activities were inhibited by alkaline phosphatase (bovine milk). These results provide evidence for the regulation of neutral cholesteryl ester hydrolases in the rat lactating mammary gland by mechanisms involving phosphorylation-dephosphorylation and therefore suggest that these enzymes may be under hormonal control.