HMG-CoA reductase is the most important regulatory enzyme in cholesterol biosynthesis. It catalyzed the reaction:

HMG-CoA + 2 NADPH + 2H⁺  <=> Mevalonate +  NADP⁺

This reaction occurs in the cytoplasm. Mevalonate is converted in a many step process to cholesterol and other steroids. Interestingly, cholesterol is an allosteric inactivator of HMG-CoA reductase, so when cells take up cholesterol by receptor mediated endocytosis, endogenous cholesterol synthesis is lessened.

A competing enzyme for HMG-CoA is HMG-CoA lyase, which is found in the cytoplasm.