Activation of the farnesoid X-receptor (FXR) affects genes controlling many pathways, including those involved in bile acid and glucose homeostasis. Here we report that a critical gene involved in cholesterol homeostasis, Insig-2, was induced when mice or cultured cells were treated with FXR agonists or infected with constitutively active FXR. No such induction was observed in agonist-treated FXR^-/- mice. Further analysis, that included electrophoretic mobility shift assays, reporter gene activation and chromatin immunoprecipitation, identified two functional FXR response elements within intron 2 of the mouse Insig-2 gene. In addition to increasing hepatic Insig-2 protein levels in wild type mice, FXR activation also reduced lanosterol 14-demethylase mRNA levels and HMG-CoA reductase protein levels. Together these changes likely account for the decrease in cholesterol synthesis observed following activation of FXR in primary hepatocytes. In conclusion, the current study links hepatic FXR activation to regulation of genes involved in cholesterol synthesis.