To elucidate the precise metabolic roles of hepatic lipase (HL), a human HL cDNA in a liver-specific expression vector was used to generate transgenic lines in the rabbit, an animal that normally expresses low levels of this enzyme. HL was detected in the plasma of all rabbits only after the administration of heparin; HL activity in transgenic rabbits was found at levels up to 80-fold greater than that in nontransgenic littermates. This increase in enzyme activity was associated with as much as a 5-fold decrease in total plasma cholesterol levels. Expression of the transgene resulted in a dramatic reduction in the level of large high density lipoproteins (HDL1 and HDL2) as well as dense HDL3. A reduction in the quantity of intermediate density lipoproteins (IDL) was also observed. These results demonstrate that HL functions in the metabolism of HDL and IDL, thereby playing a key role in plasma cholesterol homeostasis.