Ileal bile acid‐binding protein (I‐BABP) is a 14 kDa cytosolic protein which binds bile acids with a high affinity. It is thought to be implicated in the enterohepatic circulation of bile acids and, hence, in cholesterol homeostasis. Using a combination of in vivo and in vitro experiments, we have recently shown that I‐BABP gene expression can be indirectly up‐regulated by cholesterol through the activation of sterol‐responsive element‐binding protein 1c (SREBP1c) by liver X‐receptor (LXR). We report here that I‐BABP can be also a direct target for LXR. I‐BABP regulation by LXR is maintained when the SREBP binding site is deleted in the I‐BABP promoter and occurs, in the absence of conventional LXRE sequences, through an IR1 sequence previously identified as a farnesoid X‐receptor‐responsive element (FXRE). Electrophoretic mobility shift assays demonstrated that the LXR/RXR heterodimer specifically recognizes the FXRE. Collectively, these data strongly suggest that LXR can regulate the I‐BABP gene by both direct and indirect mechanisms.