Although esterification of free cholesterol to cholesteryl ester in the liver is known to be catalyzed by the enzyme acyl-coenzyme A:cholesterol acyltransferase, ACAT, the neutral cholesteryl ester hydrolase (nCEH) that catalyzes the reverse reaction has remained elusive. Because cholesterol undergoes continuous cycling between free and esterified forms, the steady-state concentrations in the liver of the two species and their metabolic availability for pathways, such as lipoprotein assembly and bile acid synthesis, depend upon nCEH activity. On the basis of the general characteristics of the family of rat carboxylesterases, we hypothesized that one member, ES-4, was a promising candidate as a hepatic nCEH. Using under-and overexpression approaches, we provide multiple lines of evidence that establish ES-4 as a bona fide endogenous nCEH that can account for the majority of cholesteryl ester hydrolysis in transformed rat hepatic cells and primary rat hepatocytes.Cytosolic cholesterol pools are in a dynamic state of turnover between the free (FC) 2 and esterified forms (CE) (1-3). The identification of the enzyme(s) in the liver that catalyzes the hydrolysis of CE at neutral pH has been elusive. In contrast, the CE that enters cells as part of apoB-containing lipoproteins through receptor-or heparan sulfate proteoglycan-mediated uptake is known to be hydrolyzed by lysosomal acid lipase, with the ensuing FC available to enter various cellular pools. A fraction of the FC trafficked to the endoplasmic reticulum (ER) is esterified by isoforms of acyl-coenzyme A:cholesterol acyltransferase (ACAT). When potentially cytotoxic levels of FC are reached, there is a significant increase in the formation of CE, which is then stored in cytosolic lipid droplets (4, 5).In the liver, CE is a component of very low density lipoproteins (VLDL). The source of CE can be either direct (i.e. synthesized completely in the ER membrane) or indirect through hydrolysis of cytosolic CE and re-esterification of FC by ACAT (6, 7). FC can also become part of VLDL, and, as in all cells, FC resulting from CE hydrolysis can be effluxed to HDL or used in the synthesis of other molecules. In liver, a major fate of FC is its conversion to bile acids and oxysterols. The interconversion between the non-lysosomal cellular pools of FC and CE in the liver is under metabolic regulation, with the key enzymatic components attributed to ACAT and neutral cholesteryl ester hydrolases (nCEHs) (8 -12).The explicit identification of nCEHs in the liver has been elusive. Ghosh and colleagues (13) have recently reported a human macrophage nCEH active in foam cells in atherosclerotic plaques that was related to a previously studied enzyme proposed as a rat hepatic nCEH (14). The latter was cloned from rat liver, and, when overexpressed in COS cells, the lysates exhibited nCEH activity against exogenously provided CE (14). However, whether this candidate operates as a nCEH under physiological conditions in hepatic cells has never been established. Another candidate that...