The infectivity and persistence of Mycobacterium tuberculosis requires the utilization of host cell cholesterol. We have examined the specific role of cytochrome P450 CYP125A1 in the cholesterol degradation pathway using genetic, biochemical and high-resolution mass spectrometric approaches. The analysis of lipid profiles from cells grown on cholesterol revealed that CYP125A1 is required to incorporate the cholesterol side-chain carbon atoms into cellular lipids, as evidenced by an increase in the mass of the methyl-branched phthiocerol dimycocerosates. We observed that cholesterol-exposed cells lacking CYP125A1 accumulate cholest-4-en-3-one, suggesting that this is a physiological substrate for this enzyme. Reconstitution of enzymatic activity with spinach ferredoxin and ferredoxin reductase revealed that recombinant CYP125A1 indeed binds both cholest-4-en-3-one and cholesterol, efficiently hydroxylates both of them at C-27, and then further oxidizes 27-hydroxycholest-4-en-3-one to cholest-4-en-3-one-27-oic acid. We determined the X-ray structure of cholest-4-en-3-one-bound CYP125A1 at a resolution of 1.58 A. CYP125A1 is essential for growth of CDC1551 in media containing cholesterol or cholest-4-en-3-one. In its absence, the latter compound is toxic for both CDC1551 and H37Rv when added with glycerol as a second carbon source. CYP125A1 is a key enzyme in cholesterol metabolism and plays a crucial role in circumventing the deleterious effect of cholest-4-en-3-one.