The current studies were undertaken to define the optimal conditions for measuring the absolute rates of cholesterol synthesis in cultured rabbit intestine and to assess whether the rate of sterol synthesis affects the esterification of locally formed or absorbed cholesterol. Using both [3H]water or [14C]octanoate (3 mM) as a precursor, sterol formation was linear during the 24 h culture, resulting in comparable estimates of the rate of synthesis equivalent to 129.5 and 118.7 nmol acetyl CoA incorporated per g per h, respectively. The presence of liposomal cholesterol or the hydroxymethylglutaryl-CoA reductase inhibitor mevinolin suppressed the rates of cholesterol synthesis by 24 and 92% of controls, respectively. Only 12% of total newly synthesized cholesterol was recovered in the medium and more than 97% was in the unesterified form, in both medium and biopsy. Even when the rate of sterol synthesis was stimulated over 90-fold by increasing concentrations of [14C]mevalonolactone, less than 8% of the label in total cholesterol was found in the sterol nucleus of the esterified cholesterol. Rather, the majority of the cholesterol ester-bound radioactivity was incorporated into the fatty acid moiety. On the other hand, there was only a limited decrease in the esterification of absorbed [3H]cholesterol both when the rate of sterol synthesis was increased with 10 mM mevalonolactone and when it was inhibited with mevinolin. The data suggest that locally synthesized and absorbed cholesterol is organized in distinct functional pools with different degrees of esterification in the mucosal epithelial cell.