The last few years have seen important advances in defining the mechanisms that cells use to monitor changes in cholesterol levels and regulate lipid metabolism. This work has unraveled a feedback system that enables cholesterol and certain sterol intermediates to regulate the proteolysis and transport of specific membrane proteins. The sterol regulatory element-binding protein (SREBP) family of transcription factors is at the center of this feedback system. These membrane-embedded proteins are activated by ER-to-Golgi transport followed by limited proteolysis. In addition, both the activation of the SREBPs and the stability of the rate-limiting enzyme in cholesterol synthesis are regulated by the ubiquitin-proteasome system in a sterol-dependent manner. The ubiquitin-proteasome system also regulates the degradation of active SREBPs. Recent work also highlights the important role of this regulatory system in several organisms, ranging from yeast to humans. In addition, the SREBP pathway has been found to regulate a diverse set of cellular processes, including phagocytosis, cell cycle progression, oxygen sensing and survival in response to bacterial infection. These advances illustrate the wide-ranging roles that SREBPs and membrane biogenesis have in cell biology.