The liver X receptors (LXRs) are ligand-activated transcription factors that regulate the expression of genes controlling lipid metabolism. Oxysterols bind LXRs with high affinity in vitro and are implicated as ligands for the receptor. We showed previously that accumulation of selected dietary sterols, in particular stigmasterol, is associated with activation of LXR in vivo. In the course of the defining of structural features of stigma-sterol that confer LXR agonist activity, we determined that the presence of an unsaturated bond in the side chain of the sterol was necessary and sufficient for activity, with the C-24 unsaturated cholesterol precursor sterols desmosterol and zymosterol exerting the largest effects. Desmosterol failed to increase expression of the LXR target gene, ABCA1, in LXRα/β-deficient mouse fibroblasts, but was fully active in cells lacking cholesterol 24-, 25-, and 27-hydroxylase; thus, the effect of desmosterol was LXR-dependent and did not require conversion to a side chain oxysterol. Desmosterol bound to purified LXRα and LXRβ in vitro and supported the recruitment of steroid receptor coactivator 1. Desmosterol also inhibited processing of the sterol response element-binding protein-2 and reduced expression of hydroxymethylglutaryl-CoA reductase. These observations are consistent with specific intermediates in the cholesterol biosynthetic pathway regulating lipid homeostasis through both the LXR and sterol response element-binding protein pathways.