The liver X-receptors (LXRs) act as cholesterol sensors and participate in the regulation of lipid and cholesterol metabolism. The objective of this study was to determine the role of LXR during development using the zebrafish model. By in situ hybridization we showed distinct expression of lxr in the brain and the retina in the developing and adult zebrafish. Lxr ligand activation affected the expression of genes involved in lipid metabolism in zebrafish adult brain and eye as well as in zebrafish embryos. Morpholino knock down of lxr resulted in an overall impaired lipid deposition as determined by oil red O staining particularly in the head and around the eyes, and to significantly elevated levels of both total and free cholesterol in the yolk of lxr morphant embryos. The expression of genes involved in lipid and cholesterol metabolism was also changed in the lxr morphants. Furthermore, alcian blue staining revealed malformation of the pharyngeal skeleton in the lxr morphant. Our data show that lxr is an important component of the regulatory network governing the lipid homeostasis during zebrafish development, which in turn may support a role of lxr for normal development of the central nervous sytem, including the retina.