The serum cholesterol on ruminant animals rises when supplemental fat is fed in a form that ensures the absorption of long-chain fatty acids. The effects of these fat supplements on cholesterol metabolism have been studied in sheep and goats. The proximal part of the small intestine was the major site of sterol synthesis in sheep. Supplementing the diet with fat significantly enhanced sterolgenesis in the small intestine both in vivo and in vitro, whereas in vitro sterolgenesis appeared to be suppressed in the liver. Increased intestinal sterolgenesis was seen with several varieties of fat, but was greatest when palm oil was fed. The reciprocal findings in the intestine and liver may reflect the increased requirement for cholesterol for the transport of triglyceride in chylomicrons and the secondary inhibiting effect of this cholesterol on sterol synthesis in the liver. Dietary fat supplementation did not alter the excretion of neutral steroids in the feces of goats but did not cause a marked reduction in the excretion of acidic steroids which may have been due to the decreased formation of sterols in the liver. In two lactating goats in which an injection of [14C] cholesterol was followed by daily intraruminal administration of labeled cholesterol, fat supplementation lowered the specific radioactivity of cholesterol in alimentary particles and in milk, being consistent with an increase in intestinally synthesized cholesterol. The hypercholesterolemia that develops in fat-fed ruminants appears to be primarily due to an increased intestinal biosynthesis of cholesterol but may also be partly due to a decreased fecal excretion of bile acids.