Cholesterol 7α-hydroxylase, the rate-limiting enzyme in bile salt synthesis from cholesterol is a P450 enzyme (CYP7A). Its expression and activity are regulated by bile salts, cholesterol, hormones and a circadian modulator. Here we define the hepatocytes contributing to the expression of the rat CYP7A gene during its in vivo circadian variation. The diurnal expression of the CYP7A messenger RNA (mRNA) was studied by in situ hybridization and correlated with the diurnal rate of CYP7A gene transcription and mRNA expression. At 10 AM, the time of lowest mRNA expression and gene transcription rate, only four to five hepatocytes, located close to the hepatic venules (“perivenular”), contained the CYP7A mRNA. At 10 PM, the time of highest mRNA expression and fastest in vitro transcription rate, approximately one half of the hepatocytes (still in a “perivenular” location) contained the cholesterol 7α-hydroxylase mRNA. In addition, the measured half-life of the CYP7A mRNA was shorter at 10 AM than at 10 PM suggesting that posttranscriptional mechanisms also contributed to the observed circadian differences. Therefore, the basal transcription rate of the CYP7A gene is maintained by four to five “perivenular” hepatocytes. During the circadian variation, the rate of gene transcription increases in these “perivenular” hepatocytes, but in addition, there is recruitment of other more proximal hepatocytes to transcribe the gene. It is proposed here that the response of specific hepatocytes to the various modulators of CYP7A gene expression is dependent on the relative position of these hepatocytes within the liver cell plate.