Using the Hep G2 cell line as a model for the human hepatocyte the question was studied whether Hep G2-peroxisomes could be able to synthesize cholesterol. Hep G2 cell homogenates were applied to density gradient centrifugation on Nycodenz, resulting in good separation between the organelles. The different organelle fractions were characterized by assaying the following marker enzymes: catalase for peroxisomes, glutamate dehydrogenase for mitochondria and esterase for endoplasmic reticulum. Squalene synthase activity was not detectable in the peroxisomal fraction. Incubation of Hep G2 cells with U18666A, an inhibitor of the cholesterol synthesis at the site of oxidosqualene cyclase, together with heavy high density lipoprotein, which stimulates the efflux of cholesterol, led to a marked increase in the activity of squalene synthase as well as HMG-CoA reductase, whereas no significant effect on the marker enzymes was observed. Neither enzyme activity was detectable in the peroxisomal density gradient fraction, suggesting that in Hep G2-peroxisomes cholesterol synthesis from the water-soluble early intermediates of the pathway cannot take place. Both stimulated and non-stimulated cells gave rise to preparations where squalene synthase activity was comigrating with the reductase activity at the lower density side of the microsomal fraction; however, it was also present at the high density side of the microsomal peak, where reductase activity was not detected.