Atherosclerosis has a strong dietary basis without a proven molecular mechanism for cholesterol absorption. To investigate the potential role of pancreas in this process and its interaction with the two dietary forms of cholesterol (free and esterified), we undertook to study the role of pancreatic cholesterol esterase in cholesterol absorption. The results showed that (i) cholesterol esters contribute a disproportionately high fraction of absorbed dietary cholesterol, (ii) rates of intestinal cholesterol absorption are related to pancreatic cholesterol esterase activity, (iii) mRNA specific for pancreatic cholesterol esterase is induced 15-fold by dietary sterol esters and 10-fold by free sterol, (iv) the induction of cholesterol esterase mRNA is reversible, and (v) free cholesterol transport into cultured human intestinal cells is enhanced 300% by pancreatic cholesterol esterase. These data implicate pancreatic cholesterol esterase as pivotal in a metabolic loop under positive feedback control for the absorption of dietary cholesterol, whether free or esterified.