We previously identified two closely linked quantitative trait loci (QTL) on distal chromosome 1 contributing to major variations in plasma cholesterol and triglyceride levels in an intercross derived from C57BL/6 (B6) and C3H/HeJ (C3H) apolipoprotein E-deficient (apoE(-/-)) mice. Soat1, encoding sterol o-acyltransferase 1, is a functional candidate gene located underneath the proximal linkage peak. We sequenced the coding region of Soat1 and identified four single nucleotide polymorphisms (SNPs) between B6 and C3H mice. Two of the SNPs resulted in amino-acid substitutions (Ile147Val and His205Tyr). Functional assay revealed an increased enzyme activity of Soat1 in peritoneal macrophages of C3H mice relative to those of B6 mice despite comparable protein expression levels. Allelic variants of Soat1 were associated with variations in plasma cholesterol and triglyceride levels in an intercross between B6.apoE(-/-) and C3H.apoE(-/-) mice. Inheritance of the C3H allele resulted in significantly higher plasma lipid levels than inheritance of the B6 allele. Soat1 variants were also significantly linked to major variations in plasma esterified cholesterol levels but not with free cholesterol levels. Trangenic expression of C3H Soat1 in B6.apoE(-/-) mice resulted in elevations of plasma cholesterol and triglyceride levels. These results indicate that Soat1 is a QTL gene contributing to hyperlipidemia.