Cholesterol was estimated in ascitic fluid of 44 patients (29 malignant and 15 tubercular). Mean ascitic cholesterol level was significantly higher in malignant ascites (89.52 mg/dl) as compared to tubercular ascites (35.07 mg/dl). At a cut off value of 54.5 mg/dl (mean in tubercular ascites + 2SD), the sensitivity, specificity, positive and negative predictive value and overall diagnostic accuracy for differentiating malignant from tubercular ascites was found to be 89.65%, 100%, 100%, 83.33% and 93.18% respectively. Ascitic fluid cholesterol estimation is a reliable and simple test for differentiating malignant ascites from tubercular ascites.