The 1923 bp cDNA for rat hepatic cholesteryl ester hydrolase (CEH) was cloned by screening a lambda gt11 expression library with an oligonucleotide containing the consensus active site sequence for cholesteryl esterases. Expression of a fusion protein, cross-reacting with antibody to the purified liver CEH, was demonstrated by Western blot analysis. The cDNA was sequenced and found to have only 44% homology with pancreatic CEH. Although unique, the cDNA sequence exhibited much greater overall homology with liver carboxylesterases, in both coding and 5'/3' non-coding regions. In Northern blot analysis, the cDNA hybridized with a single band from liver mRNA but not with pancreatic mRNA. The 1.7 kb coding sequence, predicting a 62 kDa protein, was cloned into an Escherichia coli expression system with an inducible promoter and into COS-7 cells. Both expression systems produced a protein which comigrated with liver CEH (66 kDa) on SDS-PAGE and immunoreacted with antibodies to liver CEH on Western blots. Whereas the prokaryotic system produced an inactive protein, expression in COS-7 cells was accompanied by a 5-fold increase in CEH activity and a corresponding increase in immunoreactive protein.