1. As detailed below, we have been able to reproduce observations of time-dependent changes in the activity of acyl-CoA:cholesterol acyl transferase (ACAT) in rat liver microsomes, that were suggested to represent evidence of a role for reversible phosphorylation in the regulation of cholesterol ester formation. 2. ACAT in washed rat liver microsomes was inactivated in a time-dependent manner in the presence of Mg2+. However, this effect of Mg2+ appears to be caused by aggregation of microsomal vesicles rather than dephosphorylation, since it could be abolished by rehomogenization, and was mimicked by Ca2+, another agent which causes aggregation. Fluoride did not prevent this effect of Mg2+, but masked it by causing a rapid activation that appeared to be a non-specific effect of increased ionic strength. 3. Under conditions where other proteins were rapidly dephosphorylated, microsomal ACAT activity from rat liver was not affected by incubation with the purified catalytic subunits of protein phosphatases 1, 2A or 2C. Similar results were obtained using protein phosphatases 1 or 2A on microsomes from a macrophage cell line (J774.2 cells). Incubation of cultured J774.2 cells with a cell-permeable inhibitor of these two protein phosphatases, okadaic acid, also had no effect on cholesterol ester formation. 4. A high-speed-centrifugation supernatant fraction (S303) from rat liver activated ACAT in the presence of MgATP. This effect was not abolished by prior heat-treatment of the fraction, and the supernatant fraction could not be replaced by purified AMP-activated protein kinase or a variety of other protein kinases. 5. The results above were obtained using assays involving endogenous cholesterol as the substrate. The MgATP-dependent activation by S303 was reduced or abolished when the assays were carried out in the presence of the detergent Triton WR-1339 plus cholesterol, or detergent alone. 6. These results do not support the idea that ACAT is regulated by reversible phosphorylation. The most likely explanation for the effect of S303 is that it is an artefact caused by changes in the availability of endogenous cholesterol to the enzyme.