The intracellular protozoan Toxoplasma gondii lacks a de novo mechanism for cholesterol synthesis and therefore must scavenge this essential lipid from the host environment. In this study, we demonstrated that T. gondii diverts cholesterol from low-density lipoproteins for cholesteryl ester synthesis and storage in lipid bodies. We identified and characterized two isoforms of acyl-CoA:cholesterol acyltransferase (ACAT)-related enzymes, designated TgACAT1alpha and TgACAT1beta in T. gondii. Both proteins are coexpressed in the parasite, localized to the endoplasmic reticulum and participate in cholesteryl ester synthesis. In contrast to mammalian ACAT, TgACAT1alpha and TgACAT1beta preferentially incorporate palmitate into cholesteryl esters and present a broad sterol substrate affinity. Mammalian ACAT-deficient cells transfected with either TgACAT1alpha or TgACAT1beta are restored in their capability of cholesterol esterification. TgACAT1alpha produces steryl esters and forms lipid bodies after transformation in a Saccharomyces cerevisiae mutant strain lacking neutral lipids. In addition to their role as ACAT substrates, host fatty acids and low-density lipoproteins directly serve as Toxoplasma ACAT activators by stimulating cholesteryl ester synthesis and lipid droplet biogenesis. Free fatty acids significantly increase TgACAT1alpha mRNA levels. Selected cholesterol esterification inhibitors impair parasite growth by rapid disruption of plasma membrane. Altogether, these studies indicate that host lipids govern neutral lipid synthesis in Toxoplasma and that interference with mechanisms of host lipid storage is detrimental to parasite survival in mammalian cells.