Levels of plasma HDL are determined in part by catabolism in the liver. However, it is unclear how the hepatic catabolism of holo-HDL is regulated or mediated. Recently, we found that ob/ob mice have defective liver catabolism of HDL apoproteins in vivo that can be reversed by low-dose leptin treatment. Here we examined HDL catabolism and trafficking at the cellular level using isolated hepatocytes. We demonstrate that ob/ob hepatocytes have reduced binding, association, degradation, and resecretion of HDL apoproteins and 50% less selective lipid uptake relative to wild-type hepatocytes. In addition, HDL apoproteins were found to colocalize with transferrin in the general endosomal recycling compartment (ERC) in wild-type hepatocytes. However, the localization to the ERC was markedly reduced in ob/ob hepatocytes. Filipin staining of cellular cholesterol revealed decreased cholesterol in the ERC in ob/ob hepatocytes. Defects in HDL cell association and cholesterol distribution were reversed by leptin administration. The findings show a major defect in HDL uptake and recycling in ob/ob hepatocytes and suggest that HDL recycling through the ERC plays a role in the determination of plasma HDL protein and cholesterol levels.