W e used expression cloning to isolate cDNAs encoding a microsomal 3β-hydroxy-Δ⁵-C₂₇-steroid oxidoreductase (C₂₇ 3β-HSD) that is expressed predominantly in the liver. The predicted product shares 34% sequence identity with the C₁₉ and C₂₁ 3β-HSD enzymes, which participate in steroid hormone metabolism. When transfected into cultured cells, the cloned C₂₇ 3β-HSD cDNA encodes an enzyme that is active against four 7α-hydroxylated sterols, indicating that a single C₂₇ 3β-HSD enzyme can participate in all known pathways of bile acid synthesis. The expressed enzyme did not metabolize several different C_19/21 steroids as substrates. The levels of hepatic C₂₇ 3β-HSD mRNA in the mouse are not sexually dimorphic and do not change in response to dietary cholesterol or to changes in bile acid pool size. The corresponding human gene on chromosome 16p11.2-12 contains six exons and spans 3 kb of DNA, and we identified a 2-bp deletion in the C27 3β-HSD gene of a patient with neonatal progressive intrahepatic cholestasis. This mutation eliminates the activity of the enzyme in transfected cells. These findings establish the central role of C₂₇ 3β-HSD in the biosynthesis of bile acids and provide molecular tools for the diagnosis of a third type of neonatal progressive intrahepatic cholestasis associated with impaired bile acid synthesis.