Cholesterol homeostasis is critical for cellular proliferation. Liver X receptor (LXR) alpha and beta are the nuclear receptors responsible for regulation of cholesterol metabolism. In physiological conditions, high intracellular cholesterol levels cause increased synthesis of oxysterols, which activate LXR, thus triggering a transcriptional response for cholesterol secretion and catabolism. Here we employed a mouse model of partial hepatectomy (PH) to dissect the molecular pathways connecting cholesterol homeostasis, cellular proliferation, and LXR. First, we show that hepatic cholesterol content increases after PH, whereas the entire LXR transcriptome is down-regulated. Although LXR messenger RNA (mRNA) levels are unmodified, LXR target genes are significantly down-regulated on day 1 after PH and restored to control levels on day 7, when the liver reaches normal size. The inactivation of LXR following PH is related to the reduced oxysterol availability by way of decreased synthesis, and increased sulfation and secretion. On the contrary, cholesterol synthesis is up-regulated, and extracellular matrix remodeling is enhanced. Second, we show that reactivation of LXR by way of a synthetic ligand determines a negative modulation of hepatocyte proliferation. This effect is sustained by the reactivation of hepatic cholesterol catabolic and secretory pathways, coupled with a significant reduction of cholesterol biosynthesis. Our data unveil a previously unrecognized and apparently paradoxical scenario of LXR modulation. During liver regeneration LXR activity is abated in spite of increasing intracellular cholesterol levels. Turning off LXR-transcriptional pathways is crucial to guaranteeing the requisite intracellular cholesterol levels of regenerating hepatocytes. In line with this hypothesis, pharmacological LXR reactivation during PH significantly reduces liver regeneration capacity.