High-density lipoprotein (HDL) cholesterol esters (CE) are taken up by many cells without parallel uptake of HDL apoproteins. This selective uptake is mediated by reversible incorporation of HDL CE into a plasma membrane pool, from which the CE are internalized. We now show that selectively taken up CE are directed to an extralysosomal destination where they are hydrolyzed and available to the steroidogenic pathway. Cultured human fibroblasts take up HDL CE predominantly by selective uptake. Wolman's disease fibroblasts, which are deficient in lysosomal cholesterol esterase, effectively hydrolyzed CE from HDL, but not CE taken up in low density lipoproteins (LDL); normal fibroblasts hydrolyzed both effectively. Analogously, the lysosomotropic agent chloroquine effectively blocked hydrolysis of LDL CE but not HDL CE. A similar effect of chloroquine was seen in primary cultures of rat adrenal cells, which are very active in selective uptake. More than 50% of HDL CE taken up by adrenal cells appeared in the medium as corticosterone. To examine the subcellular destination of selectively taken up CE, non-hydrolyzable tracers of HDL and LDL CE were simultaneously injected into rats. On fractionation of adrenal glands 24 h after injection, 83% of the HDL CE tracer and 48% of the LDL CE tracer were recovered in cytoplasmic lipid droplets; that LDL tracer in the lipid droplets was accounted for by selective uptake of CE from LDL. Thus, selectively taken up cholesterol esters are processed by a mechanism distinct from the classical endosomal/lysosomal pathway, and are delivered to a cytoplasmic compartment.