Cholesterol was estimated in ascitic fluid of 89 patients (29 malignant and 60 non-malignant ascites). Mean ascitic cholesterol level was significantly higher in malignant ascites (89.52 mg/dl) as compared to non-malignant ascites (29.93 mg/dl). At a cut off value of 48 mg/dl, the sensitivity, specificity, positive and negative predictive value and overall diagnostic accuracy for diagnosing malignant ascites is 96.5%, 96.6%, 93.3%, 98.3% and 96.6% respectively. Ascitic fluid cholesterol estimation is an easy and reliable test for differentiating malignant ascites from non-malignant ascites.