1. Sacs 20 cm long were obtained from the upper half of the small intestine of bile fistula rats (bile duct cannulated 48 hours previously). The sacs were everted, filled with oxygenated phosphate buffer and incubated 1 hr at 37 degrees C in 25 ml. of a buffered micellar solution of oleic acid (0.6 mM), mono-olein (0.3 mM), sodium taurocholate (4.8 mM) and (3)H-labelled cholesterol (0.15 mM) plus glucose (28 mM).2. After incubation the amount of [(3)H]cholesterol taken up by the mucosal tissue was measured. It averaged 200 n-mole/hr.g tissue wet wt. +/- 6 (S.E.).3. Adding 3 ml. whole rate bile with other factors unchanged caused cholesterol uptake to decrease by 50% in confirmation of previous studies.4. Adding purified lecithin obtained from rat liver tissue, and from egg yolks, similarly decreased cholesterol uptake. A significant response was obtained with 2.5 mg liver lecithin (concentration 0.13 mM) and a near maximum response with 15 mg (concentration 0.80 mM). 10 mg lecithin decreased uptake by an amount equivalent to that obtained with 3 ml. whole bile.5. Lecithin is an active component of whole bile causing reduced intestinal cholesterol uptake from micelles.6. The decreased uptake of cholesterol in the presence of lecithin may have been the result of expansion of the cholesterol-containing micelles with consequent reduction in cholesterol permeability.