In mammals, intracellular levels of cholesterol and fatty acids are controlled through a feedback regulatory system mediated by a family of transcription factors called sterol regulatory element-binding proteins (SREBPs). SREBPs are synthesized as inactive precursors bound to membranes of the endoplasmic reticulum. When cells are deprived of cholesterol and fatty acids, NH(2)-terminal fragments of SREBPs become proteolytically released from membranes and migrate to the nucleus to activate transcription of genes required for lipid synthesis and uptake. Conversely, lipid repletion inhibits proteolytic processing of SREBPs and thereby suppresses lipid accumulation. We review here studies in cultured cells that reveal the mechanism for regulation of SREBP proteolytic activation, and those in animal models in which SREBP proteolysis has been either activated or inhibited to show the essential role of SREBPs in regulating hepatic lipid homeostasis.