The role of 11beta-hydroxysteroid dehydrogenase type 1 (11beta-HSD1) in the local activation of the glucocorticoid receptor by converting inactive 11-ketoglucocorticoids to active 11beta-hydroxyglucocorticoids is well established. Currently, 11beta-HSD1 is considered a promising target for treatment of obese and diabetic patients. Here, we demonstrate a role of 11beta-HSD1 in the metabolism of 7-ketocholesterol (7KC), the major dietary oxysterol. Comparison of recombinant 11beta-HSD1, transiently expressed in human embryonic kidney 293 cells, revealed the stereo-specific interconversion of 7KC and 7beta-hydroxycholesterol by rat and human 11beta-HSD1, whereas the hamster enzyme interconverted 7alpha-hydroxycholesterol, 7beta-hydroxycholesterol, and 7KC. In contrast to lysates, which efficiently catalyzed both oxidation and reduction, intact cells exclusively reduced 7KC. These findings were confirmed using rat and hamster liver homogenates, intact rat hepatocytes, and intact hamster liver tissue slices. Reduction of 7KC was abolished upon inhibition of 11beta-HSD1 by carbenoxolone (CBX) or 2'-hydroxyflavanone. In vivo, after gavage feeding rats, 7KC rapidly appeared in the liver and was converted to 7beta-hydroxycholesterol. CBX significantly decreased the ratio of 7beta-hydroxycholesterol to 7KC, supporting the evidence from cell culture experiments for 11beta-HSD1-dependent reduction of 7KC to 7beta-hydroxycholesterol. Upon inhibition of 11beta-HSD1 by CBX, 7KC tended to accumulate in the liver, and plasma 7KC concentration increased. Together, our results suggest that 11beta-HSD1 efficiently catalyzes the first step in the rapid hepatic metabolism of dietary 7KC, which may explain why dietary 7KC has little or no effect on the development of atherosclerosis.