Inflammation and macrophage foam cells are characteristic features of atherosclerotic lesions, but the mechanisms linking cholesterol accumulation to inflammation and LXR-dependent response pathways are poorly understood. To investigate this relationship, we utilized lipidomic and transcriptomic methods to evaluate the effect of diet and LDL receptor genotype on macrophage foam cell formation within the peritoneal cavities of mice. Foam cell formation was associated with significant changes in hundreds of lipid species and unexpected suppression, rather than activation, of inflammatory gene expression. We provide evidence that regulated accumulation of desmosterol underlies many of the homeostatic responses, including activation of LXR target genes, inhibition of SREBP target genes, selective reprogramming of fatty acid metabolism, and suppression of inflammatory-response genes, observed in macrophage foam cells. These observations suggest that macrophage activation in atherosclerotic lesions results from extrinsic, proinflammatory signals generated within the artery wall that suppress homeostatic and anti-inflammatory functions of desmosterol. Display omitted ► Desmosterol is the dominant LXR ligand formed in macrophage foam cells ► Desmosterol integrates cholesterol and fatty acid homeostasis in the macrophage ► Desmosterol inhibits activation of inflammatory responses in macrophages ► Macrophage activation in atherosclerosis is likely due to extrinsic mediators Cholesterol accumulation in peritoneal macrophages results in unexpected suppression, rather than activation, of inflammatory gene expression, suggesting that this response is suppressed in atherosclerotic lesions by extrinsic proinflammatory signals.