Because of the positive health effects of phytosterols, phytosterol-enriched foods and foods containing elevated levels of natural phytosterols are being developed. Phytosterol contents in cereals are moderate, whereas their levels in the outer layers of the kernels are higher. The phytosterols in cereals are currently underutilized; thus, there is a need to create or identify processing fractions that are enriched in phytosterols. In this study, pearling of hulless barley and rye was investigated as a potential process to make fractions with higher levels of phytosterols. The grains were pearled with a laboratory-scale pearler to produce pearling fines and pearled grains. Lipids were extracted by accelerated solvent extraction, and nonpolar lipids were analyzed by normal-phase HPLC with ELSD and UV detection. Total sterol analyses were performed by GC. After a 90-s pearling, the amounts of pearling fines from hulless barley and rye were 14.6 and 20.1%, respectively, of the original kernel weights. During pearling, higher levels of phytosterols and other lipids were fractionated into the fines. The contents of free sterols and sterols esterified with FA in the fines were at least double those in the whole grains. Pearling fines of hulless barley and rye contained >2 mg/g phytosterol compounds, which makes them a good source of phytosterols and thus valuable raw materials for health-promoting foods.