Ketoconazole, an antimycotic agent, given to rats for a week as 0.05% food addition had no effect on the hepatic concentrations of free and esterified cholesterol or on the activity of acyl coenzyme. A: cholesterol-acyltransferase (ACAT). However, the levels of free methylated cholesterol precursors, especially lanosterols, less markedly delta 8,24 and delta 8-dimethyl sterols and monomethyl sterols, were increased after only one day's treatment, while those of esterified methyl sterols were increased inconsistently, and those of free and esterified delta 8-lathosterol, lathosterol and desmosterol were not affected at all. Cholestyramine treatment had no significant effect on ACAT in spite of a decrease in the hepatic content of esterified cholesterol and caused a marked increase in the free cholesterol precursor levels, especially in those of lathosterols. Cholestyramine given to ketoconazole-treated rats increased the hepatic levels of delta 8 and delta 7-lathosterols but not desmosterol or methylated cholesterol precursors. Ketoconazole increased and cholestyramine markedly decreased plant sterols, sitosterol and campesterol in the liver. In serum, the contents of both lanosterols and lathosterol were increased but that of cholesterol tended to be decreased by ketoconazole (-19%). The results indicate that ketoconazole impairs demethylation processes at C-14 and to some extent at C-4 in the rat liver, resulting in lowered serum cholesterol level.