Abnormal HDL metabolism among patients with diabetes and insulin resistance may contribute to their increased risk of atherosclerosis. ATP binding cassette transporter A1 (ABCA1) mediates the transport of cholesterol and phospholipids from cells to HDL apolipoproteins and thus modulates HDL levels and atherogenesis. Because fatty acids are increased in diabetes, we examined their effects on ABCA1 activity in cultured macrophages. cAMP analogs and ligands for the liver X receptor/retinoid X receptor (LXR/RXR) system can induce Abca1 transcription in murine macrophages. When induced by cAMP, unsaturated but not saturated long-chain fatty acids inhibit apolipoprotein-mediated lipid efflux by destabilizing ABCA1 protein. Here, we show that the saturated fatty acids palmitate and stearate also destabilize ABCA1 when Abca1 is induced by LXR/RXR ligands instead of cAMP. This was associated with increased palmitate and stearate desaturation by stearoyl-CoA desaturase (SCD), another gene product induced by LXR/RXR ligands. The SCD inhibitors conjugated linoleic acid and troglitazone nearly abolished ABCA1 destabilization by palmitate and stearate but not by linoleate. These results suggest that LXR/RXR ligands generate ABCA1-destabilizing monounsaturated fatty acids from their saturated precursors by activating SCD. Thus, with cholesterol-loaded macrophages exposed to saturated fatty acids, activated LXR/RXR may counteract the enhanced ABCA1 transcription by reducing the ABCA1 protein content.