Cholesterol homeostasis is required to maintain normal cellular function and avoid the deleterious effects of hypercholesterolemia. Here we show that the Drosophila DHR96 nuclear receptor binds cholesterol and is required for the coordinate transcriptional response of genes that are regulated by cholesterol and involved in cholesterol uptake, trafficking, and storage. DHR96 mutants die when grown on low levels of cholesterol and accumulate excess cholesterol when maintained on a high-cholesterol diet. The cholesterol accumulation phenotype can be attributed to misregulation of npc1b, an ortholog of the mammalian Niemann-Pick C1-like 1 gene NPC1L1, which is essential for dietary cholesterol uptake. These studies define DHR96 as a central regulator of cholesterol homeostasis. Cholesterol is an essential component of cell membranes that influences the permeability and fluidity of the lipid bilayer. Cholesterol also acts as a precursor for steroid hormone biosynthesis and contributes to cell-cell signaling pathways. These critical cellular functions are supported by regulatory mechanisms that maintain normal cholesterol levels and prevent hypercholesterolemia, which is a major risk factor for cardiovascular disease in humans. Cholesterol homeostasis in vertebrates is achieved primarily through de novo synthesis and dietary uptake (Ikonen 2008). Although extensive studies have defined a central role for the sterol regulatory elementbinding protein (SREBP) family of transcription factors in controlling cholesterol synthesis (Brown and Goldstein 1997), the mechanisms that regulate dietary cholesterol absorption remain more poorly understood. One central component of this pathway is the Niemann-Pick C1-like 1 gene NPC1L1, which encodes a plasma membrane protein that mediates the uptake of dietary cholesterol by the intestine (Wang 2007;Ge et al. 2008). Mouse mutants for NPC1L1 display significantly reduced levels of cholesterol absorption and are insensitive to treatment with the anti-hypercholesterolemia drug ezetimibe, which acts as a specific NPC1L1 inhibitor (Davis et al. 2008). Another major regulator of cholesterol homeostasis is the liver X receptor a (LXRa) nuclear receptor, which binds cholesterol metabolites and regulates the transcription of genes that control cholesterol transport and metabolism, including NPC1L1 (Duval et al. 2006;Kalaany and Mangelsdorf 2006;Valasek et al. 2007).We used the fruit fly, Drosophila, as a model system to study the regulation of cholesterol homeostasis. Unlike vertebrates, insects are cholesterol auxotrophs that are unable to synthesize this essential compound (Va'nt Hoog 1936). Little is known, however, about the mechanisms that regulate the uptake of dietary cholesterol in Drosophila. A recent study showed that the fly ortholog of NPC1L1, npc1b, is expressed specifically in the midgut and is essential for dietary cholesterol absorption (Voght et al. 2007). Other NPC disease gene homologs in Drosophila also contribute to cholesterol homeostasis. The Drosophila ortholog of vert...