The turnover of cholesterol in the brain is thought to occur via conversion of excess cholesterol into 24S-hydroxycholesterol, an oxysterol that is readily secreted from the central nervous system into the plasma. To gain molecular insight into this pathway of cholesterol metabolism, we used expression cloning to isolate cDNAs that encode murine and human cholesterol 24-hydroxylases. DNA sequence analysis indicates that both proteins are localized to the endoplasmic reticulum, share 95% identity, and represent a new cytochrome P450 subfamily (CYP46). When transfected into cultured cells, the cDNAs produce an enzymatic activity that converts cholesterol into 24S-hydroxycholesterol, and to a lesser extent, 25-hydroxycholesterol. The cholesterol 24-hydroxylase gene contains 15 exons and is located on human chromosome 14q32.1. Cholesterol 24-hydroxylase is expressed predominantly in the brain as judged by RNA and protein blotting. In situ mRNA hybridization and immunohistochemistry localize the expression of this P450 to neurons in multiple subregions of the brain. The concentrations of 24S-hydroxycholesterol in serum are low in newborn mice, reach a peak between postnatal days 12 and 15, and thereafter decline to baseline levels. In contrast, cholesterol 24-hydroxylase protein is first detected in the brain of mice at birth and continues to accumulate with age. We conclude that the cloned cDNAs encode cholesterol 24-hydroxylases that synthesize oxysterols in neurons of the brain and that secretion of 24S-hydroxycholesterol from this tissue in the mouse is developmentally regulated.