The coordinated control of cholesterol biosynthesis and esterification by 25-hydroxycholesterol was studied in the macrophage-like cell line P388D1. Since 25-hydroxycholesterol rapidly stimulated incorporation of [3H]oleate into the cholesteryl ester fraction of these cells, we have tested the possibility that the well-known inhibition of 3-hydroxy-3-methylglutaryl coenzyme A reductase (HMG-CoA reductase) by 25-hydroxycholesterol might be the indirect consequence of an increased cholesterol esterification rather than a direct effect on HMG-CoA reductase. The experimental results show that progesterone, an inhibitor of acyl-CoA:cholesterol acyltransferase (ACAT), when added together with 25-hydroxycholesterol, abolished the increased cholesterol esterification without affecting the inhibition of HMG-CoA reductase by 25-hydroxycholesterol. Thus, uncoupling cholesterol esterification had no effect on 25-hydroxycholesterol's ability to inhibit HMG-CoA reductase. Unexpectedly, pretreatment of P388D1 cells with 25-hydroxycholesterol resulted in no elevation of ACAT activity as measured in broken cell preparations. Therefore, the possibility that 25-hydroxycholesterol stimulated cholesteryl ester formation by increasing the amount of cholesterol available for esterification, rather than by acting directly on ACAT activity, was considered. Labeling experiments using [14C]-cholesterol have provided evidence for this assumption.