The hypothesis that cholesterol consumption alters hepatic sphingomyelin homeostasis was tested. Rats were fed a purified diet with or without added cholesterol (1 g/100 g) for up to 21 d. in accordance with previous work, cholesterol consumption significantly increased hepatic, whole plasma and VLDL cholesterol concentrations. Dietary cholesterol also raised the amount of sphingomyelin in the VLDL fraction, which was associated with a decrease in hepatic sphingomyelin concentrations. We suggest that the increase in hepatic VLDL secretion after cholesterol consumption imposed an increase in the demand for sphingomyelin in the liver because this phospholipid is a structural component of VLDL. Determination of the activity of two key enzymes of sphingomyelin homeostasis revealed that cholesterol consumption reduced the activity of acid sphingomyelinase in the liver but did not affect that of serine palmitoyltransferase. These enzyme data indicate that the extra sphingomyelin needed after cholesterol loading results from a decrease in the rate of its catabolism in the liver.