Sterol 27-hydroxylase is important for the degradation of the steroid side chain in conversion of cholesterol into bile acids and has been ascribed a regulatory role in cholesterol homeostasis. Its deficiency causes the autosomal recessive disease cerebrotendinous xanthomatosis (CTX), characterized by progressive dementia, xanthomatosis, and accelerated atherosclerosis. Mice with a disrupted cyp27 (cyp27(-/-)) had normal plasma levels of cholesterol, retinol, tocopherol, and 1,25-dihydroxyvitamin D. Excretion of fecal bile acids was decreased (<20% of normal), and formation of bile acids from tritium-labeled 7alpha-hydroxycholesterol was less than 15% of normal. Compensatory up-regulation of hepatic cholesterol 7alpha-hydroxylase and hydroxymethylglutaryl-CoA reductase (9- and 2-3-fold increases in mRNA levels, respectively) was found. No CTX-related pathological abnormalities were observed. In CTX, there is an increased formation of 25-hydroxylated bile alcohols and cholestanol. In bile and feces of the cyp27(-/-) mice only traces of bile alcohols were found, and there was no cholestanol accumulation. It is evident that sterol 27-hydroxylase is more important for bile acid synthesis in mice than in humans. The results do not support the contention that 27-hydroxylated steroids are critical for maintenance of cholesterol homeostasis or levels of vitamin D metabolites in the circulation.