Alginate is a copolymer of beta-D-mannuronate and alfa-L-guluronate, which are present in the cell wall of brown algae. Alginic acid is a suitable material for modification of new derivatives because of presence of its carboxyl groups. The high content of carboxyl groups over the entire length of its chain renders an easily modifiable material with a possibility of achieving a high degree of substitution in the prepared derivatives. The amidation used two-steps; methyl esterification followed by amino-de-alkoxylation. The aim of this study was to prepare highly substituted derivative with long (C-18) polysaccharide chain. The hypocholesterolemic and hypolipidemic activities of alginate and its hydrophobic derivative, which is prepared by a reaction with octadecylamine, were compared in rats fed diets containing cholesterol and palm fat at 10 and 50 g/kg, respectively. Amidated alginate at 20 g/kg significantly decreased serum cholesterol from 2.93 to 2.00 mikromol/ml, serum triacylglycerols from 1.66 to 0.92 mikromol/ml, hepatic cholesterol from 17.5 to 5.9 mikromol/g, and total hepatic lipids from 67.4 to 51.7 mg/g. Alginate at 20 g/kg significantly reduced hepatic cholesterol to 13.1 fimol/g, but did not influence serum cholesterol, triacylglycerols, and total hepatic lipids. Amidated alginate significantly increased the faecal concentrations of neutral sterols from 98.7 to 122.4 mikromol/g DM, but decreased faecal concentration of bile acids from 19.4 to 14.0 mikromol/g DM. In samples of intestinal contents, taurine-conjugated bile acids dominated glycine conjugates. The supplementation of diets with cholesterol significantly increased the expression of hepatic cholesterol 7a-hydroxylase, especially in rats that received cholesterol without alginate or amidated alginate. Amidated alginate non-significantly increased faecal concentration of fat by 24.5%.