The cholesterol ester transfer protein (CETP) facilitates the transfer of HDL cholesterol esters from plasma to the liver. Transgenic mice expressing human CETP, controlled by its natural flanking region, increase expression of this gene in response to hypercholesterolemia. We established a CETP promoter-luciferase reporter assay in differentiated 3T3-L1 adipocytes to map the sterol upregulatory element. Promoter mutagenesis suggested that a direct repeat of a nuclear receptor binding sequence separated by 4 nucleotides (DR4 element, –384 to –399) was responsible for this activity. Using mice carrying normal or mutated promoter sequences, we confirmed the importance of this element for gene induction by dietary sterol. A gel retardation complex containing LXR/RXR was identified using the CETP DR4 element and adipocyte nuclear extracts. Both LXRα/RXRα and LXRβ/RXRα transactivated the CETP promoter via its DR4 element in a sterol-responsive fashion. Thus, the positive sterol response of the CETP gene is mediated by a nuclear receptor binding site that is activated by LXRs. That Cyp7a, the rate-limiting enzyme for conversion of cholesterol into bile acids in the liver, is also regulated by LXRα suggests that this class of nuclear receptor coordinates the regulation of HDL cholesterol ester catabolism and bile acid synthesis in the liver.