CHOLESTEROL is a tasteless, odorless, fatty alcohol which we can't live without. Its natural waxlike hardness enables it to function as our internal chemical skeleton. Every cell in our body needs cholesterol to maintain its shape, without it, we would be like jellyfish, our form changed at the slightest touch.

Cholesterol's contribution to growth and reproduction is illustrated by what happens when rats are deprived of it early in life: The animals fail to develop a complete nervous system and become deficient in their sex hormones -- two functions dependent on adequate amounts of cholesterol. This early dependence is one reason some scientists warn that too severe a reduction in cholesterol during childhood could be dangerous. Mother's milk, after all, is loaded with the stuff.

Dependence on dietary cholesterol, however, is short-lived. When we're a few months old, every cell is capable of making its own supply. Within each cell is a factory able to manufacture cholesterol from simple materials. These factories seldom operate, since all our cell's demand for cholesterol is easily obtained from the supply circulating in our bloodstream.

Until recently, we didn't understand how this internal system worked. But thanks to the work of Drs. Michael Brown and Joseph Goldstein of the University of Texas Medical School, we now know that on each cell's surface are thousands of tiny cholesterol receptors, like locks on a door. Cholesterol can enter a cell only if it comes bearing the appropriate key, in its case a certain kind of protein, and only if the cell wants it. The more receptors a cell has the more rapidly it can accept cholesterol from the passing blood.

Brown and Goldstein also discovered that, depending on the blood cholesterol level, a normal cell can increase the number of its receptors from 7,000 to about 15,000. Because of this ability to attract cholesterol under varying conditions, the Texas researchers estimate that we really need only about a fifth of the circulating cholesterol most of us have.