Of the different oxygenated cholesterol metabolites, 7-ketocholesterol (7KCh) is considered a noxious oxy-sterol implicated in the development of certain pathologies, including those found in the eye. Here we elucidated whether sterol 27-hydroxylase cytochrome P450 27A1 (CYP27A1) is involved in elimination of 7KCh from the posterior part of the eye: the neural retina and underlying retinal pigment epithelium (RPE). We first established that the affinities of purified recombinant CYP27A1 for 7KCh and its endogenous substrate cholesterol are similar, yet 7KCh is metabolized at a 4-fold higher rate than cholesterol in the reconstituted system in vitro. Lipid extracts from bovine neural retina and RPE were then analyzed by isotope dilution GC-MS for the presence of the 7KCh-derived oxysterols. Two metabolites, 3β,27-dihydroxy-5-cholesten-7-one (7KCh-27OH) and 3β-hydroxy-5-cholesten-7-one-26-oic acid (7KCh-27COOH), were detected in the RPE but not in the neural retina. 7KCh-27OH was also formed when RPE homogenates were supplemented with NADPH and the mitochondrial redox system. Quantifications in human RPE showed that CYP27A1 is indeed expressed in the RPE at 2-4-fold higher levels than in the neural retina. The data obtained represent evidence for the role of CYP27A1 in retinal metabolism of 7KCh and suggest that, in addition to cholesterol removal, the functions of this enzyme could also include elimination of toxic endogenous compounds.