Sterol levels affect the expression of many genes in yeast and humans. We found that the paralogous transcription factors Upc2p and Ecm22p of yeast were sterol regulatory element (SRE) binding proteins (SREBPs) responsible for regulating transcription of the sterol biosynthetic genes ERG2 and ERG3. We defined a 7-bp SRE common to these and other genes, including many genes involved in sterol biosynthesis. Upc2p and Ecm22p activated ERG2 expression by binding directly to this element in the ERG2 promoter. Upc2p and Ecm22p may thereby coordinately regulate genes involved in sterol homeostasis in yeast. Ecm22p and Upc2p are members of the fungus-specific Zn[2]-Cys[6] binuclear cluster family of transcription factors and share no homology to the analogous proteins, SREBPs, that are responsible for transcriptional regulation by sterols in humans. These results suggest that Saccharomyces cerevisiae and human cells regulate sterol synthesis by different mechanisms.Sterols, essential for life in most, if not all, eukaryotes, are synthesized by a pathway known variously as the mevalonate pathway, the isoprenoid pathway, or the sterol biosynthetic pathway. Although sterols (which include molecules ranging from cholesterol to steroid hormones) are the major products of the sterol biosynthetic pathway, this pathway also produces many important nonsterol compounds that are necessary for cellular processes such as respiration, glycosylation, protein prenylation and photosynthesis. In the heavily studied mammalian sterol biosynthetic pathway, regulation occurs at both the transcriptional and the posttranscriptional levels. At present, the best-understood aspect of this regulation is the transcriptional response to changes in sterol levels. Sterol depletion in mammalian cells causes activation of the transcription factors known as sterol regulatory element (SRE) binding proteins (SREBPs) (8), encoded by the homologous genes SREBP-1 and SREBP-2. When sterols are abundant, the SREBPs are inactive, tethered to the endoplasmic reticulum (ER) membrane by two intrinsic transmembrane helices. When sterol levels drop, regulated proteolysis releases the transcriptional activation domains of the SREBPs from the membrane tether, allowing the activation domains to translocate to the nucleus. Once in the nucleus, these domains activate transcription of genes involved in sterol and fatty acid homeostasis.The SREBPs bind the same DNA sequences in vitro (21). In vivo, the SREBPs activate an overlapping set of target genes but may have slightly different DNA binding specificities and/or activities (8,22). Hence, differential activation and synthesis of the SREBPs may make it possible for mammalian cells to respond to a demand for different levels of sterol and nonsterol products.Many genes in the sterol biosynthetic pathway in Saccharomyces cerevisiae are transcriptionally regulated in response to changes in sterol levels (6, 13). However, less is known about this regulatory mechanism in yeast. Also, yeast lack convincing homologues of the mamm...