Previously, we described a new metabolite derived from endogenous cholesterol in the presence of hamster liver microsomal protein and NADPH (Song et al., 1991, Biochem. Pharmacol. 41, 1439-1447). Through gas chromatography/mass spectral analysis of the metabolite and its methoxime-3-dimethyl-t-butylsilyl ether derivative, this metabolite has been definitively identified as 7-oxocholesterol. Isotope incorporation experiments using molecular 18O2 demonstrated that no oxygen atoms from molecular oxygen were incorporated into the product, 7-oxocholesterol, when 7 alpha-hydroxycholesterol was used as substrate. In contrast, one atom of 18O was incorporated into cholesterol from 18O2 during its metabolism to form 7 alpha-hydroxycholesterol. Formation of 7-oxocholesterol was dependent upon the presence of NADP+, 7 alpha-hydroxycholesterol, and hamster liver microsomes. This enzyme appears to be a membrane-bound protein and its activity was most abundant in liver microsomal fractions and to a lesser extent in mitochondrial fractions; little or no activity was observed in nuclei or cytosol. The enzyme activity was present in highest content in the livers of hamsters and was also observed in human and bovine liver microsomes, but not those of mouse, rabbit, or rat. The reaction was inhibited by 2'-AMP, but not by anti-NADPH:cytochrome-P450 oxidoreductase globulin, carbon monoxide, metyrapone, nor miconazole. In contrast to the previously characterized 3 beta-hydroxy-delta 5-C27-steroid oxidoreductase activity, NAD+ did not serve as an effective cofactor for 7-oxocholesterol formation. The ability of NADPH to partially serve as a cofactor in this reaction was shown to be due to a high NADPH-oxidase activity of hamster liver microsomes, thereby providing sufficient NADP+ to serve as the oxidizing pyridine nucleotide for the reaction. These results document the existence of a non-P450, NADP(+)-dependent 7 alpha-hydroxycholesterol dehydrogenase in liver microsomes which catalyzes this reaction. The product, 7-oxocholesterol, is produced enzymatically in the livers of hamsters and other mammals and may regulate bile acid metabolism or other processes due to its action as an oxysterol.