Cholesterol exists within the hepatocyte as free cholesterol and cholesteryl ester. The proportion of intrahepatic cholesterol in the free or ester forms is governed in part by the rate of cholesteryl ester formation by acyl-coenzyme A:cholesterol acyltransferase (ACAT) and cholesteryl ester hydrolysis by neutral cholesterol ester (CE) hydrolase. In other cell types both ACAT and CE hydrolase activities are regulated in response to changes in the need for cellular free cholesterol. In rats, we performed a variety of experimental manipulations in order to vary the need for hepatic free cholesterol and to examine what effect, if any, this had on the enzymes that govern cholesteryl ester metabolism. Administration of a 20-mg bolus of lipoprotein cholesterol or a diet supplemented with 2% cholesterol resulted in an increase in microsomal cholesteryl ester content with little change in microsomal free cholesterol. This was accomplished by an increase in cholesteryl esterification as measured by ACAT but no change in CE hydrolase activity. An increased need for hepatic free cholesterol was experimentally induced by intravenous bile salt infusion or cholestyramine (3%) added to the diet. ACAT activity was decreased with both experimental manipulations compared to controls, while CE hydrolase activity did not change. Microsomal cholesteryl ester content decreased significantly with little change in microsomal free cholesterol content. Addition of exogenous liposomal cholesterol to liver microsomes from cholestyramine-fed and control rats resulted in a 784 +/- 38% increase in ACAT activity. Nevertheless, the decrease in ACAT activity with cholestyramine feeding was maintained. These studies allowed us to conclude that changes in hepatic free cholesterol needs are met in part by regulation of the rate of cholesterol esterification by ACAT without a change in the rate of cholesteryl ester hydrolysis by CE hydrolase.