Cholesterol degradation to bile acids represents 50% of total elimination of cholesterol from the body each day. Cholesterol 7 alpha-hydroxylase and sterol 27-hydroxylase catalyze initial steps in the neutral and acidic pathways, respectively. Both enzymes were recently cloned and sequenced, and hence the molecular basis of their regulation could be studied. In the rat, cholesterol 7 alpha-hydroxylase is regulated by three classes of effector molecules: a) hydrophobic (but not hydrophilic) bile acids, b) cholesterol, and c) hormones (glucocorticoids plus thyroxine, glucagon and insulin). Most studies presented so far indicate that regulation of cholesterol 7 alpha-hydroxylase probably occurs at the level of gene transcription. Sterol 27-hydroxylase, a mitochondrial P-450 enzyme, appears to be regulated by hydrophobic bile acids, but to a lesser extent than cholesterol 7 alpha-hydroxylase. The contribution of this acidic pathway to total bile acid synthesis is not known but it appears to be more significant than previously thought.