An improved assay method for cholesterol 7 alpha-hydroxylase which is accurate, sensitive, and yet still simple is described. The method consists of two parts: the first part is cholesterol 7 alpha-hydroxylation in liver microsomes utilizing cholesterol in situ as the substrate, and the second part is conversion of the product, 7 alpha-hydroxycholesterol, into 7 alpha-hydroxy-4-cholesten-3-one having an intense absorption at 240 nm by the action of cholesterol oxidase. The converted sterol is then analyzed by high-performance liquid chromatography. During the second enzyme reaction, the first enzyme reaction is halted and further metabolism of the product is prevented. In consequence, the method had more than 10-fold increase in the sensitivity than the previous one.