In several experimental and pathological conditions the cellular concentrations of cholesterol and sphingomyelin (SM) change coordinately. In an effort to identify factors mediating co-regulation, a class of suppressors of cholesterol synthesis, generically termed oxysterols, were tested for effects on sphingolipid synthesis in Chinese hamster ovary (CHO) cells. 25-Hydroxycholesterol was found to stimulate [3H]serine, [1-3H]palmitate, and [methyl-3H]choline incorporation into sphingomyelin 2- to 3-fold and increase sphingomyelin mass significantly, but did not influence synthesis of other major phospholipids. Maximal labeling of sphingomyelin by [3H]serine was observed 4-6 h after oxysterol addition, and coincided with inhibition of transcription of sterol-regulated genes and activation of cholesteryl ester synthesis. 25-Hydroxycholesterol dose-response curves for activation of sphingomyelin synthesis, suppression of sterol-regulated transcription, and activation of cholesteryl ester synthesis were also similar. Stimulation of SM and glucosylceramide synthesis was observed only with 25-hydroxycholesterol; other oxysterols and cholesterol were ineffective or inhibitory. The effects of 25-hydroxycholesterol on sphingolipid synthesis could not be reproduced by low density lipoprotein (LDL), whole serum, or non-lipoprotein cholesterol in the medium, and stimulation by 25-hydroxycholesterol was evident irrespective of a cholesterol source in the medium. 25-Hydroxycholesterol-treated CHO cells displayed enhanced conversion of [3H]sphinganine-labeled ceramide into sphingomyelin. Sphingomyelin synthesis from N-hexanoyl [3-3H]ceramide and N-hexanoyl [3-3H]dihydroceramide was also increased significantly. Consistent with enhanced ceramide conversion to sphingomyelin, ceramide mass was reduced by 20-40% in 25-hydroxycholesterol-treatment. However, in vitro activity of sphingomyelin synthase (assayed with short-chain ceramide) was not increased in membranes from oxysterol-treated cells. Stimulation of sphingolipid synthesis by 25-hydroxycholesterol is temporally related to effects of this oxysterol on cholesterol metabolism, and is the result of enhanced conversion of ceramide to SM.