Abstract β-Sitosterol, a phytosterol found in high concentrations in pulp mill effluents, has been proposed as one of the causative agents for steroid depressions observed in fish exposed to pulp mill effluents. Previous studies have suggested a cholesterol-mediated mechanism; however, it is unknown how β-sitosterol depresses gonadal steroidogenesis. In this study, adult male goldfish ( Carassius auratus) were exposed for 24–31 days to β-sitosterol (55% of a phytosterol mixture or 96% pure; 150 μg/g; Silastic implant) after which gonadal mitochondria were isolated. Pregnenolone production, an indicator of the size of the pool of reactive cholesterol, was then measured in the isolated mitochondria. Sterol exposure did not affect P450 side-chain cleavage enzyme (converts cholesterol to pregnenolone) activity but did decrease the size of the mitochondrial pool of reactive cholesterol, suggesting β-sitosterol is impeding cholesterol transfer across the mitochondrial membrane. This finding is supported by the observation that 25-hydroxycholesterol, which passes through mitochondrial membranes without need for a membrane transporter, restores β-sitosterol-induced reductions in pregnenolone production.