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If cholesterol is a substrate of P450 3A4, then it follows that it should also be an inhibitor, particularly in light of the high concentrations found in liver. Heme perturbation spectra indicated a K(d) value of 8 μM for the P450 3A4-cholesterol complex. Cholesterol inhibited the P450 3A4-catalyzed oxidations of nifedipine and quinidine, two prototypic substrates, in liver microsomes and a reconstituted enzyme system with K(i) ∼ 10 μM in an apparently non-competitive manner. The concentration of cholesterol could be elevated 4-6-fold in cultured human hepatocytes by incubation with cholesterol; the level of P450 3A4 and cell viability were not altered under the conditions used. Nifedipine oxidation was inhibited when the cholesterol level was increased. We conclude that cholesterol is both a substrate and an inhibitor of P450 3A4, and a model is presented to explain the kinetic behavior. We propose that the endogenous cholesterol in hepatocytes should be considered in models of prediction of metabolism of drugs and steroids, even in the absence of changes in the concentrations of free cholesterol.