In the body, the brain is the most cholesterol-rich organ. Despite this, remarkably little is known about the mechanisms in the brain that regulate cholesterol homeostasis. Due to the blood-brain barrier, plasma lipoproteins are unable to traverse, and instead cholesterol must be synthesized de novo from within the central nervous system. Thyroid hormone receptors, activated in response to thyroid hormone (T(3)), are known to modulate the level of serum cholesterol via complex regulatory pathways. By screening for T(3)-regulated genes we have identified Disp3, a sterol-sensing domain-containing protein that is related to the Dispatched family of proteins. Analysis by RT-PCR and immunohistochemistry demonstrated that DISP3 is predominately expressed in specific cell types of the brain, retina, and testis. Using the model of hyperthyroidism in vivo, we observed the modulation of Disp3 expression in the retina. Furthermore, in vitro analysis of Disp3 expression in cells treated with T(3) revealed both positive and negative regulation. DISP3 localizes within the endoplasmic reticulum and was further found to colocalize with cholesterol. Ectopic expression of DISP3 in fibroblasts resulted in elevated cholesterol levels combined with an altered cholesterol distribution. Given that DISP3 is highly expressed in Purkinje cells, hippocampal neurons, and retinal ganglion cells and that its overexpression results in increased cholesterol levels, it is tempting to postulate that DISP3 may contribute to cholesterol homeostasis in neural cell types. Taken together, we propose that DISP3 represents a new molecular link between thyroid hormone and cholesterol metabolism.