Four lines of evidence indicates that cholesterol-7 alpha-hydroxylase (ch-7 alpha-H, rate limiting enzyme of cholesterol catabolism) is an insulin sensitive enzyme. 1) Streptozotocin induced diabetes in the rat causes a marked increase in the hepatic activity of ch-7 alpha-H within 24 hrs. with no further increase in subsequent days. 2) Insulin injection can rapidly (within 24 hours) suppress the elevated enzyme activity to normal levels. 3) Insulin in vitro (0.02 U/ml) can directly suppress ch-7 alpha-H activity in isolated rat liver microsomes or in liver homogenates. 4) Upon exposure to insulin, microsomal ch-7 alpha-H activity showed a reduced stimulatory response to post-microsomal supernatant factors. These studies suggest that a) ch-7 alpha-H is an insulin sensitive enzyme and b) insulin might have a direct role in suppressing ch-7 alpha-H activity in rat liver.