Acylcoenzyme A:cholesterol acyltransferase (ACAT) was solubilized from Ehrlich ascites cell microsomes with Triton X-100. After removal of the detergent, ACAT activity per mg protein was reduced by 50 to 65% as compared with untreated microsomes. When this microsomal extract was combined with liposomes composed of cholesterol and egg phosphatidylcholine, the ACAT activity increased 5.4- to 6.7-fold. Under these conditions sucrose density gradient centrifugation indicated that more than 50% of the added lipid was incorporated into vesicles having the same density as the ACAT activity, suggesting the formation of a complex. ACAT activity increased 2.9-fold when the phosphatidylcholine content of the liposomes was raised from 0.5 to 5.0 mumol/mg microsomal protein. By contrast, the ACAT activity increased only 42% when the cholesterol content of the liposomes was raised from 0.17 to 0.57 mumol/mg microsomal protein. Addition of phosphatidylethanolamine to the liposomes produced little change in ACAT activity, whereas the activity was reduced by 25 and 50%, respectively, when sphingomyelin or phosphatidylserine was added. ACAT activity was five times higher when the liposomes were prepared from dioleoylphosphatidylcholine than from saturated phosphatidylcholines, including hydrogenated egg yolk, dimyristoyl or dipalmitoyl phosphatidylcholine. Likewise, the ACAT activity with liposomes made from soybean or egg yolk phosphatidylcholine was almost 3.5-fold greater than with those prepared from the saturated phosphatidylcholines. These results are consistent with the view that the activity of ACAT can be modified by changes in the composition of the membrane lipids with which the enzyme is associated.