Diabetes mellitus is accompanied by increased intestinal cholesterol synthesis and cholesterol esterification. Both are reversed by insulin therapy. To assess whether the action of insulin on cholesterol esterification by intestinal cells is direct or mediated by other effectors associated with diabetes, we investigated the effect of insulin on the activity of microsomal acyl-CoA:cholesterol acyltransferase (ACAT) and on the incorporation rate of [14C]oleic acid into cholesteryl oleate in the Caco-2 human intestinal cell line. Microsomal ACAT activity of cells that were incubated with insulin for 3 h at a concentration of 1, 10, and 100 microU/ml was decreased by 48, 58, and 74%, respectively, compared with cells cultured in insulinfree medium. This effect was evident as soon as 10 min after the addition of 10 microU/ml insulin. The inhibition by insulin was reversible. After incubation for 24 h, intracellular esterified-cholesterol content and the ratio of esterified to nonesterified cholesterol were significantly lower in the cells treated with insulin (100 microU/ml) than in those not treated with insulin (esterified cholesterol 48.6 +/- 2.0 vs. 74.2 +/- 4.3 nmol/mg protein, respectively, P less than .005; esterified to nonesterified ratio 0.280 +/- 0.008 vs. 0.359 +/- 0.059, respectively, P less than .05). Cells cultured on filters manifested physiologic polarity; greater than 90% of [14C]oleic acid-labeled cholesterol ester secreted by cells was secreted into the basolateral chambers. Incorporation of [14C]oleic acid into cholesteryl oleate over 24 h in the cells and in the medium of the basolateral chamber was suppressed by 100 microU/ml insulin by 23 and 40%, respectively. These findings indicate that insulin acts directly on the enterocytes to suppress intestinal cholesterol ester synthesis and secretion.