Cholesterol ester hydrolase activity was measured in isolated rat hepatocytes and adipocytes. Administration of triiodothyronine to rats resulted in a specific and selective increase in lysosomal acid (pH 4.5) cholesterol ester hydrolase activity in hepatocytes. Since the majority of lipoprotein degradation occurs in liver parenchymal cells (hepatocytes), the stimulation of liver (hepatocyte) acid cholesterol ester hydrolase activity by triiodothyronine could contribute to the hypocholesterolemic action of thyroid hormones. Treatment of rats with 17 alpha-ethynylestradiol to increase the hepatic degradation of lipoprotein did not change acid cholesterol ester hydrolase activity in liver, indicating that the thyroid hormone induced stimulation of acid cholesterol ester hydrolase activity in hepatocytes is not a secondary effect owing to the increased hepatic catabolism of low density lipoproteins (LDL). In contrast to the results with hepatocytes, hyperthyroidism did not increase acid cholesterol ester hydrolase activity in rat adipocytes.