Familial hypobetalipoproteinemia (FHBL) due to truncation-specifying mutations of apoB that impair hepatic lipid export in VLDL particles is associated with fatty liver. In an FHBL-like mouse with the apoB38.9 mutation, fatty liver develops despite reduced hepatic fatty acid synthesis. However, hepatic cholesterol contents in apoB38.9 mice are normal. We found that cholesterogenic enzymes (3-hydroxy-3-methylglutaryl-Coenzyme A reductase, sterol-C5-desaturase, and 7-dehydrocholesterol reductase) were consistently down regulated in two separate expression profiling experiments using a total of 19 mice [n=7 each for apob^+/+ and apob^+/38.9, and n=5 for apob^38.9/38.9] and Affymetrix Mu74Av2 GeneChip microarrays. Results were confirmed by real-time PCR. Cholesterol synthesis rates in cultured hepatocytes were reduced by 35% and 25% in apob^38.9/38.9 and apob^+/38.9, respectively, vs. apob^+/+. Hepatic triglycerides, and lipid peroxides [TBARS assay] were significantly elevated in apob^+/38.9 (117%) and apob^38.9/38.9 (132%) vs. apob^+/+ (100%), as were mRNA expression of the microsomal lipid peroxidizing enzymes,Cyp4A10 and Cyp4A14. Hepatic lipid peroxide levels were positively correlated with triglyceride contents (r=0.601, P=0.0065). Thus, the fatty liver due to a VLDL secretion defect is associated with insufficient adaptation to triglyceride accumulation and with increased lipid peroxidation. In contrast, apoB38.9 mice effectively maintain cholesterol homeostasis in the liver, at least in part, by reducing hepatic cholesterol synthesis.