Epithelial cells of the airways can, under pathological conditions, undergo squamous metaplasia. The accumulation of cholesterol sulfate has recently been described as a new marker for squamous cell differentiation in rabbit tracheal epithelial cells. We now report that normal human bronchial epithelial cells in culture metabolically incorporated [35S]-sulfate and [3H]-mevalonate into material indistinguishable from cholesterol sulfate by the criteria of solubility in organic solvents, behavior on ion-exchange chromatography, susceptibility to solvolysis, and behavior on thin-layer chromatography before and after solvolysis. The accumulation of cholesterol [35S]-sulfate correlated well with squamous cell differentiation (as measured by cross-linked envelope formation), which occurred when the cells reached confluency. The increase in the level of cholesterol sulfate could be inhibited by the inclusion of retinoic acid in the cell-culture medium. The addition of phorbol-12-myristate-13-acetate or the presence of high Ca2+ concentration in the medium stimulated the accumulation of cholesterol sulfate. An increased activity of cholesterol sulfotransferase seems to account for the cholesterol sulfate accumulation. The original observation of cholesterol sulfate accumulation during squamous differentiation thus extends across species lines and strengthens the suggestion that the cholesterol sulfate may play an important role in this type of differentiation. Moreover, cholesterol sulfate provides a sensitive biochemical marker to study this pathway of differentiation of human bronchial epithelial cells.