Cholesterol 7or-hydroxylase or cholesterol, reduced NADP : oxygen oxidoreductase (7a-hydroxylating), the initial and possibly rate-limiting step in bile acid formation is a mixed function oxidase of rat liver microsomes. This enzyme requires NADPH and oxygen. The enzyme system is induced by feeding the bile salt sequestering agent, cholestyramine, this compound effectively breaks the enterohepatic circulation of bile salts and cause about a five-fold increase in the activity of the enzyme within four days.The cholesterol 7a-hydroxylase enzyme has a K , for oxygen of approximately 20 pM. It is inhibited by carbon monoxide and this inhibition is released by irradiation with light of 450 nm. The enzyme is not inhibited by cyanide but is inhibited by cytochrome c and p-chloromercuribenzoate. The enzyme therefore appears to be a typical liver microsomal mixed function oxidase, involving NADPH, cytochrome c reductase and cytochrome P450.The cholesterol 7or-hydroxylase has an activation energy of 22 kcal/mol and is inhibited by the product of the reaction, namely, 7or-hydroxycholesterol and ah0 inhibited by bile acids and bile salts.