The lipid transport protein, apolipoprotein E (apoE), is expressed in many peripheral tissues in vivo including the adrenal gland and testes. To investigate the role of apoE in adrenal cholesterol homeostasis, we have expressed a human apoE genomic clone in the Y1 mouse adrenocortical cell line. Y1 cells do not express endogenous apoE mRNA or protein. Expression of apoE in Y1 cells resulted in a dramatic decrease in basal steroidogenesis; secretion of fluorogenic steroid was reduced 7- to greater than 100-fold relative to Y1 parent cells. Addition of 5-cholesten-3 beta,25-diol failed to overcome the suppression of steroidogenesis in these cells. Cholesterol esterification under basal conditions, as measured by the production of cholesteryl [14C]oleate, was similar in the Y1 parent and the apoE-transfected cell lines. Upon incubation with adrenocorticotropin or dibutyryl cAMP, production of cholesteryl [14C]oleate decreased 5-fold in the Y1 parent cells but was unchanged in the apoE-transfected cell lines. These results suggest that apoE may be an important modulator of cholesterol utilization and steroidogenesis in adrenal cells.