Abstract A method has been developed by which endogenous cholesterol is removed from rat liver microsomes with the full retention of cholesterol 7α-hydroxylase activity. This method consists of lyophilization of microsomes followed by extraction with distilled n-butanol. After centrifugation at 25,000g, the particulate fraction remaining from the butanol extraction is rapidly dried under vacuum. More than 90% of endogenous cholesterol is removed by this method. The butanol-extracted enzyme shows a linear increase in cholesterol 7α-hydroxylase activity with increasing protein concentration and time of incubation. The method of assay of cholesterol 7α-hydroxylase was also improved by using petroleum ether in place of the previously reported solvent systems to extract the product formed during incubation. This solvent reduces the time required for evaporation before separation of the sterols on thin-layer chromatography. The nonionic detergent, Emulgen 911, is effective in solubilizing substrate cholesterol for the assay system. It is also used to solubilize the butanol-extracted enzyme. The solubilized enzyme shows a high degree of heat lability.