Population density, temperature and food availability all regulate the formation of the Caenorhabditis elegans dauer larva by modulating endocrine signaling pathways. The orphan nuclear receptor DAF-12 is pivotal for the decision to form a dauer or to undergo normal reproductive development. The DAF-12 ligand has been predicted to be a sterol that is metabolized by DAF-9, a cytochrome P450. Here we chemically characterize purified lipophilic nematode extracts and show that the ligand for DAF-12 contains a carboxyl moiety and is likely to be derived from a sterol. Using a candidate ligand approach we find that the C27 bile acid cholestenoic acid (5-cholesten-3beta-ol-(25S)-carboxylic acid) promotes reproductive growth in dauer-constitutive mutants in a daf-9- and daf-12-dependent manner. Furthermore, we find that cholestenoic acid can act as a DAF-12 ligand by activating DAF-12 in a cell-based transcription assay. Analysis of dauer-rescuing lipophilic extracts from nematodes by gas chromatography-mass spectrometry indicates the presence of several regioisomers of cholestenoic acid that are distinct from Delta(5)-cholestenoic acid and are not present in extracts from daf-9 mutants. These data suggest that carboxylated sterols may be key determinants of life history.