Familial hypercholesterolemia is an autosomal dominant disorder with a gene-dosage effect that is usually caused by mutations in the LDL receptor gene that disrupt normal clearance of LDL. In the homozygous form, it results in a distinctive clinical phenotype, characterized by inherited hypercholesterolemia, cholesterol deposition in tendons, and severe premature coronary disease. We described previously two families with autosomal recessive hypercholesterolemia that is not due to mutations in the LDL receptor gene but is characterized by defective LDL receptor–dependent internalization and degradation of LDL by transformed lymphocytes from the patients. We mapped the defective gene to chromosome 1p36 and now show that the disorder in these and a third English family is due to novel mutations in ARH1, a newly identified gene encoding an adaptor-like protein. Cultured skin fibroblasts from affected individuals exhibit normal LDL receptor activity, but their monocyte-derived macrophages are similar to transformed lymphocytes, being unable to internalize and degrade LDL. Retroviral expression of normal human ARH1 restores LDL receptor internalization in transformed lymphocytes from an affected individual, as demonstrated by uptake and degradation of ¹²⁵I-labeled LDL and confocal microscopy of cells labeled with anti–LDL-receptor Ab.