A cDNA clone encoding for the bovine pancreatic cholesterol esterase has been sequenced. Pancreatic cholesterol esterases hydrolyze dietary cholesterol esters to cholesterol and free fatty acids, which are then absorbed from the gut. Northern blots reveal that the positive signal at 1.9 kilobases is much more intense in the cow than in calf pancreas, indicating that the induction of the enzyme is due to increased transcription or stability of mRNA. The primary structure of this enzyme is similar to that of the rat pancreatic lysophospholipase. We found that homogeneous human and bovine pancreatic cholesterol esterases have high levels of lysophospholipase activity, indicating that these two activities reside within the same protein. Therefore, the metabolism of dietary neutral lipids and polar lipids may be linked through a single enzyme.