Human liver contains an acid cholesterol ester hydrolase (CEH) of presumed lysosomal origin, but its significance is unknown. We developed a modified CEH radioassay suitable for needle biopsy specimens and measured hepatic activity of this enzyme in 69 patients undergoing percutaneous liver biopsy. Histologically normal livers hydrolyzed 5.80 +/- 0.78 SEM mumoles of cholesterol ester per hr per g of liver protein (n, 10). Values were similar in alcoholic liver disease (n, 17), obstructive jaundice (n, 9), and miscellaneous hepatic disorders (n, 21). In contrast, mean hepatic CEH activity was more than 3-fold elevated in 12 patients with acute hepatitis, 21.05 +/- 2.45 SEM mumoles per hr per g of protein (P less than 0.01). In 2 patients studied serially, CEH returned to normal as hepatitis resolved. CEH activity in all patients paralleled SGOT levels (r, 0.84; P less than 0.01). There was no correlation with serum levels of free or esterified cholesterol nor with serum activity of lecithin-cholesterol acyltransferase, the enzyme responsible for cholesterol esterification in plasma. These studies confirm the presence of CEH activity in human liver and show markedly increased activity in acute hepatitis. The pathogenesis and clinical significance of altered hepatic CEH activity in liver disease require further study.