Cholesterol synthesis is essential for homeostasis of the epidermis, being required for both cell division and differentiation, as well as maintenance of the epidermal permeability barrier. Cholesterol synthesis in keratinocytes has been demonstrated to be regulated by sterol levels and the barrier function of the stratum corneum. Cholesterol synthesis in the epidermis is correlated with changes in mRNA levels for key enzymes, such as HMG-CoA synthase and HMG-CoA reductase, which have been previously demonstrated to be coordinately regulated by the sterol regulatory element binding proteins (SREBPs). In this study we demonstrate that a functional sterol regulatory element is required for sterol regulation of HMG-CoA synthase in keratinocytes. We also investigate the regulation of cholesterol synthesis by fatty acids, which are another important constituent of the stratum corneum lipids. Palmitic and oleic acid inhibit 14C-labelled acetate incorporation into sterols in a similar manner to sterols. However, unlike sterols, 50 microM oleic acid increase the steady state mRNA levels of HMG-CoA synthase and the activity of the HMG-CoA synthase promoter. The addition of 50 microM oleic acid to 25-hydroxycholesterol results in an enhancement of the inhibitory effect of the sterol on promoter activity. The inhibition of acetate incorporation into sterols in human keratinocytes by 50 microM palmitic and 50 microM oleic acid is not due to regulation of HMG-CoA synthase at the level of transcription.