Sterol 12alpha-hydroxylase catalyzes the synthesis of cholic acid and controls the ratio of cholic acid over chenodeoxycholic acid in the bile. Transcription of CYP8B1 is inhibited by bile acids, cholesterol, and insulin. To study the mechanism of CYP8B1 transcription by bile acids, we have cloned and determined 3389 base pairs of the 5'-upstream nucleotide sequences of the human CYP8B1. Deletion analysis of CYP8B1/luciferase reporter activity in HepG2 cells revealed that the sequences from -57 to +300 were important for basal and liver-specific promoter activities. Hepatocyte nuclear factor 4alpha (HNF4alpha) strongly activated human CYP8B1 promoter activities, whereas cholesterol 7alpha-hydroxylase promoter factor (CPF), an NR5A2 family of nuclear receptors, had much less effect. Electrophoretic mobility shift assay identified an overlapping HNF4alpha- and CPF-binding site in the +198/+227 region. The human CYP8B1 promoter activities were strongly repressed by bile acids, and the bile acid response element was localized between +137 and +220. Site-directed mutagenesis of the HNF4alpha-binding site markedly reduced promoter activity and its response to bile acid repression. On the other hand, mutation of the CPF-binding site had little effect on promoter activity and bile acid inhibition. A negative nuclear receptor, small heterodimer partner markedly inhibited transactivation of CYP8B1 by HNF4alpha. Mammalian two-hybrid assay confirmed that HNF4alpha interacted with small heterodimer partner. Furthermore, bile acids and farnesoid X receptor reduced the expression of nuclear HNF4alpha in HepG2 cells and rat livers and its binding to DNA. Bile acids and farnesoid X receptor also inhibited mouse HNF4alpha gene transcription. In summary, our data revealed the critical roles HNF4alpha play on CYP8B1 transcription and its repression by bile acids. Bile acids repress human CYP8B1 transcription by reducing the transactivation activity of HNF4alpha through interaction of HNF4alpha with SHP and reduction of HNF4alpha expression in the liver.