C57BL/6J mice are susceptible to atherosclerosis when fed a diet consisting of fat, cholesterol, and taurocholate. The susceptibility to diet-induced atherosclerosis is linked to a reduction in plasma high density lipoprotein (HDL). Diet-induced reduction of plasma HDL shows a physiological and a genetic correlation with repression of cholesterol-7-alpha-hydroxylase, the liver-specific enzyme that regulates the conversion of cholesterol into bile acids. To examine the hypothesis that the repression of cholesterol-7-alpha-hydroxylase is responsible for initiating the metabolic alterations leading to the formation of atherosclerosis and gallstones, we determined whether constitutive transgenic expression of cholesterol-7-alpha-hydroxylase in C57BL/6J mice would confer resistance to these 2 common human diseases. When fed the atherogenic diet, nontransgenic littermates, but not cholesterol-7-alpha-hydroxylase transgenic mice, accumulated cholesterol and cholesterol esters in their livers and plasma. Although the atherogenic diet caused a marked decrease in plasma HDL cholesterol in nontransgenic mice, HDL levels in transgenic mice remained relatively unchanged. Moreover, the ability of cholesterol-7-alpha-hydroxylase transgenic mice to maintain cholesterol and lipoprotein homeostasis completely prevented the formation of atherosclerosis and gallstones. These data establish the integral role that cholesterol-7-alpha-hydroxylase has in maintaining hepatic cholesterol homeostasis and, thus, in the susceptibility to the formation of gallstones and atherosclerosis.