The effect of diabetes control on the activities of hydroxymethylglutaryl-CoA reductase (HMG-CoA reductase), cholesterol acyltransferase (ACAT), and phenol 2-monooxygenase, the major enzymes regulating cholesterol metabolism, was determined in alloxan-induced diabetic rabbits, and the results obtained were correlated with lipid and lipoprotein levels. Although intestinal HMG-CoA reductase activity was significantly increased (P less than 0.001) in poorly controlled compared with moderately controlled diabetic rabbits, there was a significant reduction in the activities of intestinal ACAT (P less than 0.01), hepatic HMG-CoA reductase (P less than 0.05) and ACAT (P less than 0.001), and phenol 2-monooxygenase (P less than 0.01). The poorly controlled animals were hypercholesterolemic (P less than 0.01), and this was reflected in the very-low-density and high-density lipoprotein fractions. Serum cholesterol levels in the nondiabetic and moderately controlled diabetic groups were similar. This increase in intestinal HMG-CoA reductase activity in the poorly controlled diabetic animals occurred in the absence of hyperphagia. Although abnormalities in cellular cholesterol metabolism could be partly responsible for the alterations in serum cholesterol levels in diabetes, the precise mechanisms underlying these enzymatic changes have yet to be elucidated.