Oral administration of ursodeoxycholic acid (UDCA) renders bile unsaturated with cholesterol by reducing the hepatic output of cholesterol. Theoretically, several mechanisms may be of importance. In the present overview, the effect of treatment with UDCA on hepatic cholesterol metabolism is evaluated, in particular the influence on hepatic cholesterol synthesis, 3-hydroxy-3-methylglutaryl coenzyme A (HMG CoA) reductase activity, bile acid synthesis, 7 alpha-hydroxylation of cholesterol, and esterification of cholesterol--acyl coenzyme A: cholesterol acetyltransferase (ACAT) activity. It is apparent that UDCA treatment does not inhibit the hepatic HMG CoA reductase activity. Neither is ACAT activity or the cholesteryl ester content changed by UDCA. The catabolism of cholesterol to bile acids is unaffected or slightly increased during administration of UDCA. It is concluded that a stimulated degradation of cholesterol to bile acids may partly explain the decrease in hepatic secretion of cholesterol obtained during UDCA administration. It is suggested that the reduction in cholesterol absorption from the intestine seen during UDCA therapy may also be of importance.