The enzyme acyl coenzyme A:cholesterol acyltransferase 1 (ACAT1) mediates sterol esterification, a crucial component of intracellular lipid homeostasis. Two enzymes catalyze this activity in Saccharomyces cerevisiae (yeast), and several lines of evidence suggest multigene families may also exist in mammals. Using the human ACAT1 sequence to screen data bases of expressed sequence tags, we identified two novel and distinct partial human cDNAs. Full-length cDNA clones for these ACAT related gene products (ARGP) 1 and 2 were isolated from a hepatocyte (HepG2) cDNA library. ARGP1 was expressed in numerous human adult tissues and tissue culture cell lines, whereas expression of ARGP2 was more restricted. In vitro microsomal assays in a yeast strain deleted for both esterification genes and completely deficient in sterol esterification indicated that ARGP2 esterified cholesterol while ARGP1 did not. In contrast to ACAT1 and similar to liver esterification, the activity of ARGP2 was relatively resistant to a histidine active site modifier. ARGP2 is therefore a tissue-specific sterol esterification enzyme which we thus designated ACAT2. We speculate that ARGP1 participates in the coenzyme A-dependent acylation of substrate(s) other than cholesterol. Consistent with this hypothesis, ARGP1, unlike any other member of this multigene family, possesses a predicted diacylglycerol binding motif suggesting that it may perform the last acylation in triglyceride biosynthesis.