1. Oestradiol-17beta induces livers of Xenopus laevis (South African clawed toad) to synthesize and secrete into the serum large quantities of the egg-yolk-protein precursor, vitellogenin. The peak of this response occurs 9-16 days after hormone treatment [Dolphin, Ansari, Lazier, Munday & Akhtar (1971) Biochem. J.124, 751-758]. It is now shown that 6 days after hormone treatment a 120-160-fold stimulation of the synthesis of cholesterol and fatty acid compared with control values occurred. 2. A cell-free system, derived from Xenopus liver, which synthesizes squalene and fatty acid is described. By using this system, several hundredfold stimulation of incorporation of [(14)C]acetate into squalene was recorded 6 days after the administration of oestradiol-17beta, compared with a 3-4-fold stimulation of incorporation of [(3)H]mevalonate compared with control values. It is argued that oestradiol-17beta must affect enzyme(s) catalysing step(s) between acetate and mevalonate in the biosynthetic pathway to cholesterol. 3. In incubation of liver slices in vitro, most of the lipid and cholesterol synthesized in response to the steroid hormone was associated with those subcellular fractions that contained membranes. Moreover, pulse-labelling experiments in vivo showed that 70% of this lipid and cholesterol was retained in the liver. The remainder appeared in the serum, where it was equally distributed between vitellogenin and vitellogenin-free serum. 4. G.l.c. analyses of the cholesterol content of liver microsomal fractions of Xenopus laevis indicated that the cholesterol content was at least 50% higher in microsomal fractions obtained from livers that had been exposed to oestradiol-17beta. Meanwhile, g.l.c. analysis of the lipid moiety of secreted vitellogenin showed that up to 35% of its lipid was cholesterol.