Cell-free extracts of Saccharomyces cerevisiae grown under aerobic as well as semi-anaerobic conditions were found to catalyze the synthesis of fatty acid ester of sterol from cholesterol, fatty acid, ATP and CoA, or from cholesterol and fatty acyl-CoA. This result indicates that the enzyme involved in the formation of the ester is acyl-CoA:sterol O-acyltransferase (EC 2.3.1.26). The enzyme had a broad substrate specificity for sterols and acyl-CoAs. The enzyme levels in the cells grown under aerobic and semi-anaerobic conditions were almost equal. The enzyme was located in the microsomal fraction of the aerobically grown cells.