Human lysosomal acid lipase (hLAL) is essential for the hydrolysis of cholesteryl esters and triglycerides in the lysosome. Defective hLAL activity leads to two autosomal recessive traits, Wolman disease (WD) or cholesteryl ester storage disease (CESD). Phenotypically, WD has accumulation of both triglycerides and cholesteryl esters, while CESD has mainly elevated cholesteryl esters. We characterized mutations in the hLAL gene from two CESD siblings. By reverse transcriptase-PCR (RT-PCR) and cDNA cloning and sequencing, we identified homozygous deletion mutations of nucleotides 863 to 934, in the hLAL transcript. Normal levels of LAL mRNA were detected. The deletion in mRNA is due to a G to A transition in the last nucleotide of exon 8 of the hLAL gene, a splice junction mutation (E8SJM) that resulted in exon skipping, and a predicted in-frame deletion of the 24 amino acids. [35S]Met metabolic labeling studies in fibroblasts showed a low level of E8SJM LAL ( approximately 38%) that was highly unstable. Heterologous expression of E8SJM LAL in insect cells gave an LAL with low catalytic activity toward cholesteryl oleate and triolein. The effects of this mutation are complex with the production of decreased amounts of an unstable LAL that is catalytically defective. The results suggest that E8SJM leads to essentially a null allele and that the differences in WD and CESD phenotype involve other factors.