Chlorella powder (CP) has a hypocholesterolemic effect and high bile acid-binding capacity; however, its effects on hepatic cholesterol metabolism are still unclear. In the present study, male Wistar rats were divided into four groups and fed a high sucrose + 10% lard diet (H), an H + 10% CP diet (H+CP), an H + 0.5% cholesterol + 0.25% sodium cholate diet (C), or a C + 10% CP diet (C+CP) for 2 weeks. CP decreased serum and liver cholesterol levels significantly in rats fed C-based diets, but did not affect these parameters in rats fed H-based diets. CP increased the hepatic mRNA level and activity of cholesterol 7alpha-hydroxylase (CYP7A1). CP increased hepatic HMG-CoA reductase (HMGR) activity in the rats fed H-based diets, but not in rats fed C-based diets. CP did not affect hepatic mRNA levels of sterol 27-hydroxylase, HMGR, low-density lipoprotein (LDL) receptor, scavenger receptor class B1, ATP-binding cassette (ABC) A1, ABCG5, or ABCB11. Furthermore, the effect of a 3.08% Chlorella indigestible fraction (CIF, corresponding to 10% CP) on hepatic cholesterol metabolism was determined using the same animal models. CIF also decreased serum and liver cholesterol levels significantly in rats fed C-based diets. CIF increased hepatic CYP7A1 mRNA levels. These results suggest that the hypocholesterolemic effect of CP involves enhancement of cholesterol catabolism through up-regulation of hepatic CYP7A1 expression and that CIF contributes to the hypocholesterolemic effect.