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Liver is the major organ responsible for the final elimination of cholesterol from the body either as biliary cholesterol or as bile acids. Intracellular hydrolysis of lipoprotein-derived cholesteryl esters (CEs) is essential to generate the free cholesterol required for this process. Earlier, we demonstrated that overexpression of human CE hydrolase (Gene symbol CES1) increased bile acid synthesis in human hepatocytes and enhanced reverse cholesterol transport in mice. The objective of the present study was to demonstrate that liver-specific deletion of its murine ortholog, Ces3, would decrease cholesterol elimination from the body and increase atherosclerosis.Liver-specific Ces3 knockout mice (Ces3-LKO) were generated, and Ces3 deficiency did not affect the expression of genes involved in cholesterol homeostasis and free cholesterol or bile acid transport. The effects of Ces3 deficiency on the development of Western diet–induced atherosclerosis were examined in low density lipoprotein receptor knock out−/− mice. Despite similar plasma lipoprotein profiles, there was increased lesion development in low density lipoprotein receptor knock out−/−Ces3-LKO mice along with a significant decrease in the bile acid content of bile. Ces3 deficiency significantly reduced the flux of cholesterol from [3H]-CE–labeled high-density lipoproteins to feces (as free cholesterol and bile acids) and decreased total fecal sterol elimination.Our results demonstrate that hepatic Ces3 modulates the hydrolysis of lipoprotein-delivered CEs and thereby regulates free cholesterol and bile acid secretion into the feces. Therefore, its deficiency results in reduced cholesterol elimination from the body, leading to significant increase in atherosclerosis. Collectively, these data establish the antiatherogenic role of hepatic CE hydrolysis.