A catalytically active bile salt-dependent cholesteryl ester hydrolase (CEH) was expressed when Xenopus oocytes were injected with rat liver mRNA. The expressed CEH activity was highly dependent on the presence of trihydroxy bile salts (cholate or one of its conjugates); maximum hydrolytic activity was observed in the presence of 10 mM sodium cholate. The expressed CEH was not activated by dihydroxy bile salts (deoxycholate and its conjugates). In the presence of 10 mM sodium cholate, the CEH activity was maximal near pH 7 but was significant between pH 6 and 8. Monospecific immune IgG raised against rat pancreatic CEH completely inhibited the CEH expressed in Xenopus oocytes. Phenylmethylsulfonyl fluoride, a serine enzyme inhibitor, was inhibitory to the expressed CEH activity, whereas p-chloromercuribenzoate (up to 5 mM), a potent thiol-blocking agent, did not significantly inhibit the expressed activity. These experiments clearly demonstrate that the liver contains an mRNA encoding a bile salt-dependent CEH activity and suggest that the uptake of pancreatic enzyme is not necessarily the source of liver CEH as has been speculated.