Lipid-deprived mice increase alveolar surfactant disaturated phosphatidylcholine (DSPtdCho) synthesis compared with mice fed a standard diet by increasing expression of CTP:phosphocholine cytidylyltransferase (CCT), the rate-limiting enzyme for DSPtdCho synthesis. We previously observed that lipid deprivation increases mRNA synthesis for CCT [Ryan, McCoy, Mathur, Field and Mallampalli (2000) J. Lipid Res. 41, 1268–1277]. To evaluate regulatory mechanisms for this gene, we cloned the proximal ∼ 1900bp of the 5′ flanking sequence of the murine CCT gene, coupled this to a luciferase reporter, and examined transcriptional regulation in a murine alveolar epithelial type II cell line (MLE-12). The core promoter was localized to a region between −169 and +71bp, which exhibited strong basal activity comparable with the simian virus 40 promoter. The full-length construct, from −1867 to +71, was induced 2–3-fold when cells were cultured in lipoprotein-deficient serum (LPDS), similar to the level of induction of the endogenous CCT gene. By deletional analysis the sterol regulatory element (SRE) was localized within a 240bp region. LPDS activation of the CCT promoter was abolished by mutation of this SRE, and gel mobility-shift assays demonstrated specific binding of recombinant SRE-binding protein to this element within the CCT promoter. These observations indicate that sterol-regulated expression of CCT is mediated by an SRE within its 5′ flanking region.