Objective To investigate the hypocholesterolemic activity of red yeast rice (RYR) and its underlying mechanism. Methods Three groups of hamsters were fed either the control diet or one of the two experimental diets containing by weight 0.1% RYR (0.1RYR) or 0.3% RYR (0.3RYR). Blood (0.5 mL) was collected from the retro-orbital sinus into a heparinized capillary tube at the end of week 0, 3, and 6. Plasma lipoproteins were measured using enzymatic kits, while fecal neutral and acidic sterols were quantified using a gas-liquid chromatography. Results Plasma total cholesterol was reduced by 12% in 0.1RYR group and by 18% in 0.3RYR group compared with the control value. Similarly, plasma triacylglycerol was decreased by 11% in 0.1RYR group and by 24% in 0.3RYR group. Western blotting analysis demonstrated that RYR had no effect on sterol regulatory element binding protein 2, liver X receptor, 3-hydroxy-3-methylglutary-CoA reductase, LDL receptor, and cholesterol-7α-hydroxylase. HPLC analysis confirmed that RYR contained 0.88% monacolin K. It was recently found that RYR supplementation increased excretion of fecal acidic sterols by 3-4 folds compared with the control value. Conclusion Hypocholesterolemic activity of RYR is mediated at least partially by enhancement of acidic sterol excretion.