Ethanol induces the development of hepatic steatosis, increasingly recognized as causing vulnerability to subsequent liver injury. Ethanol has been shown to activate SREBP-1 (sterol regulatory element-binding protein) processing through the conventional cholesterol-sensitive pathway (1). The present study demonstrates that ethanol can also bring about SREBP-1 cleavage and activation through a novel pathway dependent on the endoplasmic reticulum-localized caspases-4 and -12. Evidence is presented that tumor necrosis factor can stimulate caspase-4 and -12 activation in ethanol-exposed cells, which cleaves SREBP-1 to a transcriptionally active form to induce the synthesis of lipogenic enzymes and triglycerides. Moreover, the caspase-4 and -12-dependent activation of SREBP-1 is insensitive to the normal negative feedback exerted by cholesterol and is mediated by the translocation of the scaffolding protein, TRAF-2, to the endoplasmic reticulum.