The protein encoded by the HSD17B7 gene was originally described as a prolactin receptor-associated protein and as 17β-hydroxysteroid dehydrogenase (HSD) type 7. Its ability to synthesize 17β-estradiol in vitro has been reported previously. However, we demonstrate that HSD17B7 is the ortholog of the yeast 3-ketosteroid reductase Erg27p and converts zymosterone to zymosterol in vitro, using reduced nicotinamide adenine dinucleotide phosphate as cofactor. Expression of human and murine HSD17B7 in an Erg27p-deficient yeast strain complements the 3-ketosteroid reductase deficiency of the cells and restores growth on sterol-deficient medium. A fusion of HSD17B7 with green fluorescent protein is located in the endoplasmic reticulum, the site of postsqualene cholesterogenesis. Further critical evidence for a role of HSD17B7 in cholesterol metabolism is provided by the observation that its murine ortholog is a member of the same highly distinct embryonic synexpression group as hydroxymethyl-glutaryl-coenzyme A reductase, the rate-limiting enzyme of sterol biogenesis, and is specifically expressed in tissues that are involved in the pathogenesis of congenital cholesterol-deficiency disorders. We conclude that HSD17B7 participates in postsqualene cholesterol biosynthesis, thus completing the molecular cloning of all genes of this central metabolic pathway. In its function as the 3-ketosteroid reductase of cholesterol biosynthesis, HSD17B7 is a novel candidate for inborn errors of cholesterol metabolism.