Abstract A purified (300-fold) liver protein specifically binds squalene and sterol precursors of cholesterol and activates (4-fold or greater) the microsomal enzymic steps of cholesterol biosynthesis in which these precursors participate. This heat-stable protein appears to play a general role as vehicle for cholesterol and its water-insoluble precursors, i.e. it is a squalene and sterol carrier protein (SCP). Apo-SCP (molecular weight 16,000) aggregates to a higher molecular weight species (g150,000) during binding of squalene or sterols and yields a noncovalent squalene- or sterol-SCP complex. Apo-SCP similarly binds stoichiometric levels of a cholesterol precursor and the pyridine nucleotide cofactor required for the oxidation or reduction of the precursor by microsomal enzymes. The apparent Km for a particular sterol-SCP complex is markedly lower than that for initially unbound sterol, although the maximum rate of the particular reaction is unchanged. Of the other liver and serum proteins tested, only apo-high density lipoprotein (HDL) will substitute for the binding and activation functions of apo-SCP. A component of HDL may be identical with apo-SCP.