Cholesterol of glial origin promotes synaptogenesis (Mauch et al., (2001) Science 294:1354-1357). Because in the hippocampus local estradiol synthesis is essential for synaptogenesis, we addressed the question of whether cholesterol-promoted synapse formation results from the function of cholesterol as a precursor of estradiol synthesis in this brain area. To this end, we treated hippocampal cultures with cholesterol, estradiol, or with letrozole, a potent aromatase inhibitor. Cholesterol increased neuronal estradiol release into the medium, the number of spine synapses in hippocampal slice cultures, and immunoreactivity of synaptic proteins in dispersed cultures. Simultaneous application of cholesterol and letrozole or blockade of estrogen receptors by ICI 182 780 abolished cholesterol-induced synapse formation. As a further approach, we inhibited the access of cholesterol to the first enzyme of steroidogenesis by knock-down of steroidogenic acute regulatory protein, the rate-limiting step in steroidogenesis. A rescue of reduced synaptic protein expression in transfected cells was achieved by estradiol but not by cholesterol. Our data indicate that in the hippocampus cholesterol-promoted synapse formation requires the conversion of cholesterol to estradiol.