Multiple AUUUA elements similar to those that regulate the degradation of several different mRNAs are conserved in the 3'-untranslated region (3'-UTR) of cholesterol-7 alpha-hydroxylase (CYP7A1) mRNAs from several species. We examined if stabilization of mRNA decay could account for the >20-fold increase in the expression of CYP7A1 mRNA without a detectable change in transcription following dexamethasone treatment of rat hepatoma cells (L35 cells). Following RNA polymerase II-dependent transcription block or protein synthesis block, the decay of CYP7A1 mRNA displayed a short half-life (similar to 30 min). Control experiments showed that in cells pre-treated with a RNA polymerase II inhibitor, dexamethasone had no detectable effect on CYP7A1 mRNA decay, Stable expression of luciferase reporter mRNAs in L35 cells showed that the CYP7A1 3'-UTR was required to observe a dexamethasone induction. To examine the hypothesis that a labile protein is required for dexamethasone-induced mRNA stabilization, cells were stably transfected with a tetracycline-repressible promoter that drives the expression of a green fluorescent protein analogue (ECFP) with or without the 3'-UTR of CYP7A1, Cells expressing ECFP with the 5'-UTR of CYP7A1 displayed a 3-fold dexamethasone induction of ECFP mRNA, whereas cells expressing ECFP without the 3'-UTR did not. Moreover, specific block of the transcription of ECFP containing the 3'-UTR by adding the tetracycline analogue doxycycline clearly displayed dexamethasone-induced stabilization of mRNA decay, These data provide compelling evidence that a putative labile protein and the 3'-UTR of CYP7A1 act together to decrease the rate of CYP7A1 mRNA degradation.