The effects of sphingomyelin degradation on [3H]cholesterol transfer from the cell surface to mitochondria were examined in mouse Leydig tumor cells. These cells were used since they utilize cholesterol for steroid hormone synthesis in the mitochondria, and also possess acyl-CoA: cholesterol acyl transferase (ACAT) activity in the endoplasmic reticulum. Exposure of glutaraldehyde-fixed mouse Leydig tumor cells to sphingomyelinase (50 mU/ml, 60 min) resulted in the degradation of about 50% of cell sphingomyelin, suggesting that only half of the sphingomyelin mass in these cells was located in the exoleaflet of the plasma membrane. The partial sphingomyelin degradation resulted in the translocation of cellular unesterified [3H]cholesterol from plasma membranes (cholesterol oxidase-susceptible) to intracellular compartments (oxidase-resistant). The fraction of [3H]cholesterol that was translocated, i.e., between 20 and 50%, varied with different [3H]cholesterol-labeling methods. Cholesterol translocation induced by sphingomyelin degradation subsequently led to the stimulation of ACAT activity, suggesting that a fraction of cell surface cholesterol was transported to the endoplasmic reticulum. The sphingomyelinase-induced [3H]cholesterol flow from the cell surface to the cell interior was also in part directed to the mitochondria, as evidenced by the increased secretion of [3H]steroid hormones. In addition, the cyclic AMP-induced activation of steroidogenesis was further enhanced by the sphingomyelinase-induced cholesterol translocation. Based on the current results, it seems evident that a significant portion of the translocated [3H]cholesterol made its way from plasma membranes into the mitochondria for steroidogenesis.