Radiolabeled cholesteryl oleate, when incorporated into phospholipid vesicles, was hydrolyzed at acid pH by an enzyme present in rabbit aortic homogenates. In contrast, cholesteryl oleate presented as an acetone dispersion was not effectively hydrolyzed at acid pH under identical conditions. Using the vesicle preparation as substrate, a sensitive assay system for the acid hydrolase was developed in which hydrolysis was proportional to protein concentration and incubation time, and was independent of substrate concentration. The physical state of the vesicles was apparently not altered by the assay conditions, and no hydrolysis of the vesicle-associated phospholipid was detected. Acid cholesterol esterase activity in atherosclerotic aortic tissue was 2.5-fold greater than that of control tissue, and even greater increases were observed in the activities of other lysosomal enzymes (N-acetyl-beta-d-glucosaminidase and beta-glucuronidase). Glucose-6-phosphatase activity was also increased in aortas from cholesterol-fed animals while 5' nucleotidase activity remained unchanged. Labeled triolein also was incorporated into phospholipid vesicles and was hydrolyzed by an acid lipase in aortic tissue. Similarities between triolein and cholesteryl oleate hydrolysis existed with respect to pH optimum and the effect of cholesterol feeding on activity, suggesting that a single enzyme may hydrolyze both lipids.