Sterol carrier protein2 (SCP2) is known to stimulate utilization of cholesterol in enzymic reactions in which cholesterol is the substrate. Substantial recent experimental evidence indicates that SCP2: activates enzymic conversion of intermediates between lanosterol and cholesterol; stimulates the microsomal conversion of cholesterol into cholesterol ester in rat liver; and enhances mitochondrial utilization of cholesterol for pregnenolone formation in the adrenals. The conversion of cholesterol into 7 alpha-hydroxycholesterol is the rate-limiting step in bile-acid synthesis. We therefore investigated the effect of SCP2 on this physiologically critical reaction by using a gas-chromatography-mass-spectrometry procedure that measures the mass of 7 alpha-hydroxycholesterol formed. The results show that SCP2 enhances 7 alpha-hydroxycholesterol formation by rat liver microsomes (microsomal fractions), utilizing either endogenous membrane cholesterol, cholesterol supplied exogenously in serum or in the form of cholesterol/phospholipid liposomes. Microsomes immunotitrated with anti-SCP2 antibody exhibited considerably less capacity to synthesize 7 alpha-hydroxycholesterol, which was restored to control levels on addition of purified SCP2. These data are consistent with the suggestion that SCP2 may be of physiological significance in the overall metabolism of cholesterol.