Cholesterol is an steroid that modulates the fluidity of eukaryotic membranes. Cholesterol is also the precursor of steroid hormones.

All of the carbon atoms of cholesterol are derived from acetate, that is first converted to isoprene units (C5) - units that have the carbon skeleton of isoprene. Acetyl-CoA is converted to isoprene units by a series of reactions that begins with formation of HMG-CoA (hydroxymethylglutaryl-CoA). HMG-CoA is the precursor of two isoprenoid intermediates, isopentenyl pyrophophate and dimethylallyl pyrophosphate.

Isoprene units are condensed to form a linear precursor to cholesterol and then cyclized.

Four isopentenyl-PP and two dimethylallyl-PP condense to form the C30 cholesterol precursor squalene (open-chain hydrocarbon).

Then squalene is cyclized to form the tetracyclic steroid skeleton.