This experiment was designed to evaluate the effects of casein, soy protein, soy protein with bound phospholipids (SP), soy protein peptic hydrolysate (SPH) or soy protein peptic hydrolysate with bound phospholipids (SPHP) on the micellar solubility of cholesterol and the taurocholate binding capacity in vitro. We also evaluated the effects of various proteins on cholesterol metabolism in rats and Caco-2 cells. SPHP had a significantly greater bile acid-binding capacity than that of SPH in vitro. Micellar cholesterol solubility in vitro was significantly lower in the presence of SPHP compared to casein tryptic hydrolysate (CTH). The cholesterol micelles containing SPHP and SPH significantly suppressed cholesterol uptake by Caco-2 cells compared to the cholesterol micelles containing CTH. Consistent with these findings in the in vivo cholesterol absorption study using radioisotopes, fecal excretion of total steroids was significantly greater in rats fed the SPHP diet compared with those fed the casein, soy protein, SP and SPH diets. Serum total cholesterol was significantly lower in rats fed SPHP than in those fed casein. The concentrations of total lipids and cholesterol in liver were significantly lower in the SPHP-fed group compared with all other groups. These results suggest that the suppression of cholesterol absorption by direct interaction between cholesterol-mixed micelles and SPHP in the jejunal epithelia is part of the mechanism underlying the hypocholesterolemic action of SPHP. SPHP may also inhibit the reabsorption of bile acids in the ileum, thus lowering the serum cholesterol level.