Although esterification of free cholesterol to cholesteryl ester in the liver is known to be catalyzed by the enzyme acyl-coenzyme A:cholesterol acyltransferase, ACAT, the neutral cholesteryl ester hydrolase (nCEH) that catalyzes the reverse reaction has remained elusive. Because cholesterol undergoes continuous cycling between free and esterified forms, the steady-state concentrations in the liver of the two species and their metabolic availability for pathways, such as lipoprotein assembly and bile acid synthesis, depend upon nCEH activity. On the basis of the general characteristics of the family of rat carboxylesterases, we hypothesized that one member, ES-4, was a promising candidate as a hepatic nCEH. Using under- and overexpression approaches, we provide multiple lines of evidence that establish ES-4 as a bona fide endogenous nCEH that can account for the majority of cholesteryl ester hydrolysis in transformed rat hepatic cells and primary rat hepatocytes.