Fibrates are widely used hypolipidemic drugs that regulate the expression of many genes involved in lipid metabolism by activating the peroxisome proliferator-activated receptor alpha (PPARalpha). The objective of this study was to investigate the mechanism of action of peroxisome proliferators and PPARalpha on the transcription of cholesterol 7alpha-hydroxylase, the rate-limiting enzyme in the conversion of cholesterol to bile acids in the liver. When cotransfected with the expression vectors for PPARalpha and RXRalpha, Wy14,643 reduced human and rat cholesterol 7alpha-hydroxylase gene (CYP7A1)/luciferase reporter activities by 88% and 43%, respectively, in HepG2 cells, but not in CV-1 or CHO cells. We have mapped the peroxisome proliferator response element (PPRE) to a conserved sequence containing the canonical AGGTCA direct repeats separated by one nucleotide (DR1). This DR1 sequence was mapped previously as a binding site for the hepatocyte nuclear factor 4 (HNF-4) which stimulates CYP7A1 transcription. Electrophoretic mobility shift assay (EMSA) showed no direct binding of in vitro synthesized PPARalpha/RXRalpha heterodimer to the DR1 sequence. PPARalpha and Wy14,643 did not affect HNF-4 binding to the DR1. However, Wy14,643 and PPARalpha/RXRalpha significantly reduced HNF-4 expression in HepG2 cells. These results suggest that PPARalpha and agonist repress cholesterol 7alpha-hydroxylase activity by reducing the availability of HNF-4 for binding to the DR-1 sequence and therefore attenuates the transactivation of CYP7A1 by HNF-4.