This study was designed to clarify the mechanisms of the hypocholesterolemic action of Spirulina platensis concentrate (SPC) and identify the novel hypocholesterolemic protein derived from SPC. We investigated the effects of casein or SPC on the solubility of cholesterol, taurocholate binding capacity in vitro, cholesterol absorption in Caco-2 cells, and cholesterol metabolism in rats for 10 d. We also evaluated the effects of SPC, C-phycocyanin (PHY), and PHY residue on cholesterol metabolism in rats fed a high-cholesterol diet for 5 d, and SPC or SPC-acetone extract for 10 d. SPC had a significantly greater bile acid-binding capacity than casein in vitro. Micellar cholesterol solubility and cholesterol uptake by Caco-2 cells was significantly lower in the presence of SPC compared with casein. Fecal excretion of cholesterol and bile acids was significantly greater in rats fed the SPC-supplemented diet than in those fed the casein control diet. Serum and liver cholesterol concentrations were significantly lower in rats fed SPC than in those fed casein. Thus, the hypocholesterolemic action of SPC may involve the inhibition of both jejunal cholesterol absorption and ileal bile acid reabsorption. Although no studies to date have found a hypocholesterolemic protein among the algal proteins, we report here the discovery of a hypocholesterolemic effect in the novel protein C-phycocyanin. This study provides the first direct evidence that PHY, a novel hypocholesterolemic protein derived from Spirulina platensis, can powerfully influence serum cholesterol concentrations and impart a stronger hypocholesterolemic activity than SPC in animals.