Diethylumbelliferyl phosphate (UBP) has been shown to inhibit the neutral cholesteryl ester hydrolase activity responsible for hydrolysis of cellular lipid droplet cholesteryl ester (Harrison et al., 1990). The potential for (UBP) to inhibit uptake and hydrolysis of high density lipoprotein (HDL) cholesteryl ester was studied in Fu5AH hepatoma cells, a model for HDL cholesterol delivery. Coincubation of 3H-cholesteryl ester labeled HDL with UBP resulted in a 72% decrease in the cellular free cholesterol/cholesteryl ester (FC/CE) isotope ratio, indicating an inhibition in the conversion of cholesteryl ester to free cholesterol. Total cellular 3H-CE uptake was modestly (27%) but significantly decreased by UBP. Pulse-chase experiments (15 min. pulse and 7 min. chase) were used to study the hydrolysis of HDL 3H-CE in subcellular fractions separated by percoll gradients. The conversion of 3H-CE to 3H-FC could be demonstrated in fractions that comigrated with the plasma membrane/endosome fractions but were well separated from lysosomes. Neutral cholesteryl ester hydrolase activity was detected in those same fractions. These results suggest that an extralysosomal pathway is operating in the metabolism of HDL cholesterol and its delivery to hepatoma cells.