We reported in another paper [Chang, C. C. Y., Doolittle, G. M., & Chang, T. Y. (1986) Biochemistry (preceding paper in this issue)] that in Chinese hamster ovary (CHO) cells activation of acyl coenzyme A:cholesterol acyltransferase (ACAT) activity by treating cells with cycloheximide was abolished by providing exogenous sterol in the medium. We now report that providing 20 mM DL-mevalonate to cells grown in sterol-free medium increases the ACAT activity by approximately 6-fold and diminishes the cycloheximide activation effect. The mevalonate supplement has no significant effect on the rate of triglyceride or polar lipid synthesis, [3H]cholesterol efflux, or bulk protein degradation in cells. The activation of ACAT by mevalonate is prevented by adding a specific squalene oxide cyclase inhibitor to cells, indicating the requirement for endogenous sterol synthesis to mediate the mevalonate effect. In sterol-free medium, if sterol synthesis is blocked by specific enzyme inhibitors or through mutation, the ACAT activation by cycloheximide is again abolished. These results support the hypothesis that there may exist a short-lived factor(s) serving directly or indirectly as an endogenous ACAT inhibitor(s), the inhibitory action of this (these) factor(s) is (are) abolished, and its (their) turnover rate(s) is (are) increased by either exogenous sterol or by sterol endogenously synthesized. Conversely, removing exogenous sterol coupled with blocking endogenous sterol synthesis decreases the turnover rate(s) of the inhibitor(s), rendering its (their) action insensitive to intracellular degradation over the time period studied.