The demonstration of a defect of cholesterol esterification in a mutant strain of BALB/c mice with an attendant reduction of sphingomyelinase activity [Pentchev, P. G., Boothe, A. D., Kruth, H.S., Weintroub, H., Stivers, J. & Brady, R. O. (1984) J. Biol. Chem. 259, 5784-5791] prompted us to examine the capacity of cultured human Niemann-Pick fibroblasts to esterify exogenously derived cholesterol. Cholesterol was supplied to cell cultures in the form of native or chemically modified, positively charged low density lipoprotein or as non-lipoprotein cholesterol. Cholesterol esterification was not impaired in cell cultures derived from patients with type A or B Niemann-Pick disease. However, esterification of exogenously administered cholesterol was deficient in 20 type C Niemann-Pick cell lines that were available for testing. Fluorescence histochemical staining of unesterified cholesterol in type C cells suggested that these cells were able to internalize and lysosomally process lipoprotein cholesterol. Acyl-CoA:cholesterol acyltransferase activity did not appear deficient in type C cell extracts. The error in cholesterol esterification may provide an opportunity for probing the molecular lesion in this disorder and may afford a useful and reliable means for establishing diagnosis.