Human obesity is associated with abnormal hepatic cholesterol homeostasis and resistance to leptin action. Because leptin administration to rodents promotes the biliary elimination of plasma cholesterol, this study was designed to elucidate a pathophysiological role for leptin during the development of obesity. We fed mice diets containing high or low saturated fat contents. Before and after the onset of obesity, we measured downstream targets of leptin action and evaluated plasma, hepatic, and biliary cholesterol metabolism. Although not obese at 28 days, mice fed a high fat diet became hyperleptinemic. Sensitivity to leptin was evidenced by downregulation of both hepatic stearoyl CoA desaturase-1 and fatty acid synthase. Due principally to upregulation of adenosine triphosphate-binding cassette proteins A1 and G5, plasma high density lipoprotein (HDL) cholesterol concentrations increased, as did relative secretion rates of biliary cholesterol. A smaller, more hydrophilic bile salt pool decreased intestinal cholesterol absorption. In this setting, hepatic cholesterol synthesis was downregulated, indicative of increased uptake of plasma cholesterol. After 56 days of high fat feeding, obesity was associated with leptin resistance, as evidenced by marked hyperleptinemia without downregulation of stearoyl CoA desaturase-1 or fatty acid synthase and by upregulation of hepatic cholesterol and bile salt synthesis. Hypercholesterolemia was attributable to overproduction and decreased clearance of large HDL(1) particles. In conclusion, before the onset of obesity, preserved leptin sensitivity promotes biliary elimination of endogenous cholesterol in response to dietary fat. Leptin resistance due to obesity leads to a maladaptive response whereby newly synthesized cholesterol in the liver is eliminated via bile.