Up-regulation of heme oxygenase-1 (HO-1) and altered cholesterol (CH) metabolism are characteristic of Alzheimer-diseased neural tissues. The liver X receptor (LXR) is a molecular sensor of CH homeostasis. In the current study, we determined the effects of HO-1 over-expression and its byproducts iron (Fe(2+)), carbon monoxide (CO) and bilirubin on CH biosynthesis, CH efflux and oxysterol formation in cultured astroglia. HO-1/LXR interactions were also investigated in the context of CH efflux. hHO-1 over-expression for 3 days ( approximately 2-3-fold increase) resulted in a 30% increase in CH biosynthesis and a two-fold rise in CH efflux. Both effects were abrogated by the competitive HO inhibitor, tin mesoporphyrin. CO, released from administered CORM-3, significantly enhanced CH biosynthesis; a combination of CO and iron stimulated CH efflux. Free iron increased oxysterol formation three-fold. Co-treatment with LXR antagonists implicated LXR activation in the modulation of CH homeostasis by heme degradation products. In Alzheimer's disease and other neuropathological states, glial HO-1 induction may transduce ambient noxious stimuli (e.g. beta-amyloid) into altered patterns of glial CH homeostasis. As the latter may impact synaptic plasticity and neuronal repair, modulation of glial HO-1 expression (by pharmacological or other means) may confer neuroprotection in patients with degenerative brain disorders.