The influence of membrane cholesterol on the activities of acyl-CoA: cholesterol acyltransferase and 3-hydroxy-3-methylglutaryl-CoA reductase was examined in three microsomal subfractions (RNA-rich, RNA-poor, and smooth) that had been enriched with cholesterol by incubation with mixed lipoproteins from hypercholesterolemic rabbit serum. Acyl-CoA: cholesterol acyltransferase activity was significantly stimulated in the three subfractions, particularly in the RNA-rich microsomal component. 3-Hydroxy-3-methylglutaryl-CoA reductase, on the other hand, was suppressed (30%) in only one (RNA-poor) of the three microsomal subfractions, despite a 1.4-fold increase in the concentration of membrane cholesterol. An attempt was made to distinguish between an effect based exclusively on an increase in available cholesterol substrate and an activation of acyl-CoA: cholesterol acyltransferase in RNA-rich microsomes enriched with cholesterol. An experimental design was devised so that substrate cholesterol was provided in the form of heated smooth microsomes and acyl-CoA: cholesterol acyltransferase was provided as a separate preparation in the form of RNA-rich microsomes. Appropriate controls were carried out to test for transfer of cholesteryl ester between the two sets of particles. The results suggested that cholesterol enhanced acyl-CoA: cholesterol acyltransferase activity by serving both as a substrate and as a non-substrate modulator.