To extend our knowledge of how the synthesis of free bile acids and bile salts is regulated within the hepatocyte, bile acid-CoA:amino acid N-acyltransferase and bile acid-CoA thioesterase activities were measured in subcellular fractions of human liver homogenates. Some bile acids, both conjugated and unconjugated, have been reported to be natural ligands for the farnesoid X receptor (FXR), an orphan nuclear receptor. The conversion of [(14)C]choloyl-CoA and [(14)C]chenodeoxycholoyl-CoA into the corresponding tauro- and glyco-bile acids or the free bile acids was measured after high-pressure liquid radiochromatography. There was an enrichment of the N-acyltransferase in the cytosolic and the peroxisomal fraction. Bile acid-CoA thioesterase activities were enriched in the cytosolic, peroxisomal, and mitochondrial fractions. The highest amidation activities of both choloyl-CoA and chenodeoxycholoyl-CoA were found in the peroxisomal fraction (15-58 nmol/mg protein/min). The K(m) was higher for glycine than taurine both in cytosol and the peroxisomal fraction.These results show that the peroxisomal de novo synthesis of bile acids is rate limiting for peroxisomal amidation, and the microsomal bile acid-CoA synthetase is rate limiting for the cytosolic amidation. The peroxisomal location may explain the predominance of glyco-bile acids in human bile. Both a cytosolic and a peroxisomal bile acid-CoA thioesterase may influence the intracellular levels of free and conjugated bile acids.