The ileal apical sodium bile acid cotransporter participates in the enterohepatic circulation of bile acids. In patients with primary bile acid malabsorption, mutations in the ileal bile acid transporter gene (Slc10a2) lead to congenital diarrhea, steatorrhea, and reduced plasma cholesterol levels. To elucidate the quantitative role of Slc10a2 in intestinal bile acid absorption, the Slc10a2 gene was disrupted by homologous recombination in mice. Animals heterozygous (Slc10a2+/-) and homozygous (Slc10a2-/-) for this mutation were physically indistinguishable from wild type mice. In the Slc10a2-/- mice, fecal bile acid excretion was elevated 10- to 20-fold and was not further increased by feeding a bile acid binding resin. Despite increased bile acid synthesis, the bile acid pool size was decreased by 80% and selectively enriched in cholic acid in the Slc10a2-/- mice. On a low fat diet, the Slc10a2-/- mice did not have steatorrhea. Fecal neutral sterol excretion was increased only 3-fold, and intestinal cholesterol absorption was reduced only 20%, indicating that the smaller cholic acid-enriched bile acid pool was sufficient to facilitate intestinal lipid absorption. Liver cholesteryl ester content was reduced by 50% in Slc10a2-/- mice, and unexpectedly plasma high density lipoprotein cholesterol levels were slightly elevated. These data indicate that Slc10a2 is essential for efficient intestinal absorption of bile acids and that alternative absorptive mechanisms are unable to compensate for loss of Slc10a2 function.