Squalene synthase (SQase) catalyzes the condensation of two molecules of farnesyl diphosphate (FPP) to form presqualene diphosphate (PSPP) and the subsequent rearrangement and NADPH-dependent reduction of PSPP to squalene (SQ). These reactions are the first committed steps in cholesterol biosynthesis. When recombinant SQase was incubated with FPP in the presence of dihydroNADPH (NADPH3, an unreactive analogue lacking the 5,6-double bond in the nicotinamide ring), three products were formed: dehydrosqualene (DSQ), a C30 analogue of phytoene; 10(S)-hydroxysqualene (HSQ), a hydroxy analogue of squalene; and rillingol (ROH), a cyclopropylcarbinyl alcohol formed by addition of water to the tertiary cyclopropylcarbinyl cation previously proposed as an intermediate in the rearrangement of PSPP to SQ (Poulter, C. D. Acc. Chem. Res. 1990, 23, 70-77). The structure and absolute stereochemistry of the tertiary cyclopropylcarbinyl alcohol were established by synthesis using two independent routes. Isolation of ROH from the enzyme-catalyzed reaction provides strong evidence for a cyclopropylcarbinyl-cyclopropylcarbinyl rearrangement in the biosynthesis of squalene. By comparing the SQase-catalyzed solvolysis of PSPP in the absence of NADPH3 to the reaction in the presence of NADPH3, it is apparent that the binding of the cofactor analogue substantially enhances the ability of SQase to control the regio- and stereochemistry of the rearrangements of PSPP.