By converting cholesterol to 24S-hydroxycholesterol, cytochrome P450 46A1 (CYP46A1) initiates the major pathway for cholesterol removal from the brain. Two crystal structures of CYP46A1 were determined. First is the 1.9-A structure of CYP46A1 complexed with a high-affinity substrate cholesterol 3-sulfate (CH-3S). The second structure is that of the substrate-free CYP46A1 at 2.4-A resolution. CH-3S is bound in the productive orientation and occupies the entire length of the banana-shaped hydrophobic active-site cavity. A unique helix B'-C loop insertion (residues 116-120) contributes to positioning cholesterol for oxygenation catalyzed by CYP46A1. A comparison with the substrate-free structure reveals substantial substrate-induced conformational changes in CYP46A1 and suggests that structurally distinct compounds could bind in the enzyme active site. In vitro assays were performed to characterize the effect of different therapeutic agents on cholesterol hydroxylase activity of purified full-length recombinant CYP46A1, and several strong inhibitors and modest coactivators of CYP46A1 were identified. Structural and biochemical data provide evidence that CYP46A1 activity could be altered by exposure to some therapeutic drugs and potentially other xenobiotics.