Accumulation of cholesterol causes both repression of genes controlling cholesterol biosynthesis and cellular uptake and induction of cholesterol 7␣-hydroxylase, which leads to the removal of cholesterol by increased metabolism to bile acids. Here, we report that LXR␣ and LXR, two orphan members of the nuclear receptor superfamily, are activated by 24(S),25-epoxycholesterol and 24(S)-hydroxycholesterol at physiologic concentrations. In addition, we have identified an LXR response element in the promoter region of the rat cholesterol 7␣-hydroxylase gene. Our data provide evidence for a new hormonal signaling pathway that activates transcription in response to oxysterols and suggest that LXRs play a critical role in the regulation of cholesterol homeostasis.Cholesterol (CH) 1 is a major structural constituent of cellular membranes and serves as the biosynthetic precursor for bile acids and steroid hormones. Animal cells can obtain CH endogenously through de novo synthesis from acetyl-CoA or exogenously through receptor-mediated endocytosis of low density lipoproteins. Cells must balance the internal and external sources of CH so as to maintain mevalonate biosynthesis while at the same time avoiding the accumulation of excess CH, which can result in diseases such as atherosclerosis, gallstones, and several lipid storage disorders (1).CH homeostasis is maintained in part through feedback regulation of the low density lipoprotein receptor gene and at least two genes encoding enzymes in the CH biosynthetic pathway, 3-hydroxy-3-methylglutaryl coenzyme A synthase and 3-hydroxy-3-methylglutaryl coenzyme A reductase (1). Although increases in dietary CH lead to the inhibition of expression of these genes in vivo, it remains unclear whether CH or CH metabolites are responsible for this inhibition (2). Experiments performed in vitro using several different cell lines have indicated that derivatives of CH that are oxygenated on the CH side chain are significantly more potent in the suppression of sterol biosynthesis than CH (3). These oxysterols are produced through the actions of P450 enzymes in various metabolic pathways including bile acid synthesis in the liver and sex hormone synthesis in the adrenal glands. The in vitro activities of oxysterols together with their presence in vivo suggests that oxysterols may serve in metabolic feedback loops to regulate CH homeostasis.Although CH and its oxysterol metabolites can repress gene transcription, in at least one instance dietary CH has been shown to stimulate gene expression. Expression of the cholesterol 7␣-hydroxylase (CYP7A) gene, which encodes the enzyme responsible for the initial and rate-limiting step in the conversion of CH to bile acids (4), is up-regulated in rats fed a CH-rich diet (5-7). This stimulatory effect provides a regulatory mechanism whereby excess dietary CH can be converted to more polar bile acids for subsequent removal from the body. Although the molecular mechanism is unknown, induction of CYP7A expression in the presence of CH occurs at the level...