Bile acids are primarily synthesized from cholesterol in the liver and have important roles in dietary lipid absorption and cholesterol homoeostasis. Detailed roles of the orphan nuclear receptors regulating cholesterol 7α-hydroxylase (CYP7A1), the rate-limiting enzyme in bile acid synthesis, have not yet been fully elucidated. In the present study, we report that oestrogen-related receptor γ (ERRγ) is a novel transcriptional regulator of CYP7A1 expression. Activation of cannabinoid receptor type 1 (CB1 receptor) signalling induced ERRγ-mediated transcription of the CYP7A1 gene. Overexpression of ERRγ increased CYP7A1 expression in vitro and in vivo, whereas knockdown of ERRγ attenuated CYP7A1 expression. Deletion analysis of the CYP7A1 gene promoter and a ChIP assay revealed an ERRγ-binding site on the CYP7A1 gene promoter. Small heterodimer partner (SHP) inhibited the transcriptional activity of ERRγ and thus regulated CYP7A1 expression. Overexpression of ERRγ led to increased bile acid levels, whereas an inverse agonist of ERRγ, GSK5182, reduced CYP7A1 expression and bile acid synthesis. Finally, GSK5182 significantly reduced hepatic CB1 receptor-mediated induction of CYP7A1 expression and bile acid synthesis in alcohol-treated mice. These results provide the molecular mechanism linking ERRγ and bile acid metabolism.