A novel inhibitor of acyl-CoA:cholesterol acyltransferase (ACAT), designated gypsetin, was isolated from the cultured broth of Nannizzia gypsea var. incurvata IFO 9228 by solvent extraction, silica gel chromatography and crystallization. Gypsetin inhibited rat liver microsomal ACAT activity competitively with respect to the substrate oleoyl-CoA with an apparent Ki value of 5.5 microM. In cultured macrophage J774 cells incubated with oxidized low density lipoprotein, gypsetin inhibited cholesteryl ester formation from [14C]oleate by 50% at a concentration of 0.65 microM without affecting cell surface binding, uptake and degradation of the lipoprotein.