The liver regulates cholesterol homeostasis and eliminates excess cholesterol as bile acids or biliary cholesterol. Free cholesterol for bile acid synthesis or biliary secretion is obtained by the hydrolysis of stored cholesteryl esters or from cholesteryl esters taken up by the liver from high-density lipoproteins via a selective uptake pathway. The present study was undertaken to characterize the enzyme catalyzing this reaction, namely, cholesterol ester hydrolase (CEH) from the human liver, and demonstrate its role in regulating bile acid synthesis. Two cDNAs were isolated from the human liver that differed only in the presence of an additional alanine at position 18 in one of the clones. Transient transfection of COS-7 cells with a eukaryotic expression vector containing either of these two cDNAs resulted in significant increase in the hydrolysis of cholesteryl esters, authenticating these clones as human liver CEH. CEH mRNA and protein expression in human hepatocytes were demonstrated by real-time PCR and Western blot analyses, respectively, confirming the location of this enzyme in the cell type involved in hepatic cholesterol homeostasis. Overexpression of these CEH clones in human hepatocytes resulted in significant increase in bile acid synthesis, demonstrating a role for liver CEH in modulating bile acid synthesis. This CEH gene mapped on human chromosome 16, and the two clones represent two different transcript variants resulting from splice shifts at exon 1. In conclusion, these data identify that human liver CEH was expressed in hepatocytes, where it potentially regulates the synthesis of bile acids and thus the removal of cholesterol from the body.