Mouse peritoneal macrophages take up acetylated human low density lipoprotein by receptor-mediated endocytosis, hydrolyze its cholesteryl esters in lysosomes, and re-esterify the cholesterol in the cytoplasm. The re-esterified cholesterol accumulates as cytoplasmic lipid droplets that resemble the droplets seen in “foam cells” of atherosclerotic lesions. In the present studies, we have investigated the metabolism of these cytoplasmic lipid droplets by incubating mouse peritoneal macrophages with acetylated human low density lipoprotein and then withdrawing the lipoprotein and following the fate of the cytoplasmic cholesteryl esters. The results demonstrate that these esters undergo a continual cycle of hydrolysis and re-esterification with a half-life of about 24 h. Hydrolysis appears to be mediated by a non-lysosomal cholesteryl ester hydrolase whose activity is resistant to lysosomal inhibitors such as chloroquine and ammonium chloride. Re-esterification is mediated by an acyl-CoA:cholesterol acyltransferase enzyme whose activity is enhanced in extracts of cells that have accumulated cholesteryl esters. Progesterone, an inhibitor of macrophage acyl-CoAxholesterol acyltransferase activity in vitro, inhibits the re-esterification of hydrolyzed cholesteryl esters in intact cells. As a result, progesterone produces a decline in the cellular content of cholesteryl ester and a reciprocal increase in the free cholesterol content of the cells. Inasmuch as the re-esterification reaction uses acyl-CoA derivatives that require ATP for their synthesis, the continual hydrolysis and reesterification of cholesterol in macrophage foam cells constitutes a futile cycle that wastes ATP. Incubation of cholesteryl ester-laden macrophages with high density lipoprotein disrupts the cycle by removing free cholesterol from the cell, thereby suppressing the reesterification reaction and leading to net cholesteryl ester hydrolysis. Thus, high density lipoprotein promotes net cholesteryl ester hydrolysis without actually increasing the rate of the hydrolytic reaction. These findings may have relevance to the pathologic changes that occur when macrophages and other scavenger cells become overloaded with cytoplasmic cholesteryl ester droplets in disease states.