27-Hydroxycholesterol was found in surprisingly high amounts in atherosclerotic human femoral arteries. When human macrophages were cultured in a medium containing serum, there was a significant transfer of 27-hydroxy-cholesterol and 3 beta-hydroxy-5-cholestenoic acid from the cells into the medium. Sterol 27-hydroxylase (EC 1.14.13.15) is likely to be responsible for formation of the two products as shown by use of immunoblotting, a specific inhibitor, and the 18O-labeling technique. Sterol 27-hydroxylase has the unusual ability to hydroxylate the same methyl group three times to give a carboxylic acid; thus, 3 beta-hydroxy-5-cholestenoic acid is likely to be a direct product of the enzyme. The production of these steroids increased after addition of cholesterol to the culture medium. By using deuterium-labeled cholesterol, it was ascertained that most of the oxidized products were formed from exogenous cholesterol taken up by the cells. 27-Hydroxycholesterol and 3 beta-hydroxy-5-cholestenoic acid are present in the circulation and are efficiently converted into bile acids in human liver. It is suggested that conversion of cholesterol into 27-hydroxycholesterol and 3 beta-hydroxy-5-cholestenoic acid represents a general defence mechanism for macrophages and possibly also other peripheral cells exposed to cholesterol. Absence of this defence mechanism may contribute to the premature atherosclerosis known to occur in patients with sterol 27-hydroxylase deficiency (cerebrotendinous xanthomatosis).